Gene Munster, a well-known technology analyst and executive partner of Deepwater Asset Management, said that the US stock market will be in a bull market driven by technology stocks for the next five years.
He predicted in a recent interview that 2024 will be the beginning of a multi-year bull market in the technology industry.
"I think we are entering a three to five year science and technology bull market," Munster said. "This is driven by artificial intelligence. It has nothing to do with interest rates, but it is about the fundamental change in productivity. I think we will enter the first year of the science and technology foam, which will be formed in the next three to five years."
His views have been endorsed by other members of Wall Street, who have also called for a long-term bull market in technology stocks.
Munster stated that this momentum will be largely driven by productivity improvements brought about by artificial intelligence. Previously, Goldman Sachs predicted that artificial intelligence could increase labor productivity by 1.5 percentage points in the next 10 years.
Some analysts warned that the speculative foam was forming in view of the huge profits of some of the biggest winners in the market last year, but Munster said that since AI technology will prove to be a game changing technology, it is expected that the technology foam will emerge.
He added: "When such a huge change as artificial intelligence occurs, foam is the only logical result."
However, Munster stated that he believes that stocks from the "tech seven" will no longer dominate the market as they did in 2023. He said that small technology companies are sure to perform strongly this year and expects the Russell 2000 growth stocks to outperform the S&P 500 index.
Other strategists have also warned that the "Big Seven" may encounter trouble in the future. Last year, most of the gains in the S&P 500 index were contributed by the "Big Seven". An investment advisor stated that the valuations of these seven stocks are so extreme that the market may see a tug of war in another direction and generate "huge" gains in all other areas.