Since the beginning of this year, stimulated by the wave of artificial intelligence, the US stock market has rebounded strongly from last year's decline. However, according to a Wall Street analyst's prediction, the current round of gains in the United States may have just begun.
James Demmert, Chief Investment Officer of Main Street Research, a US investment research firm, recently stated that AI may drive the US stock market to continue bullish for the next 10 years.
Investment veteran Demeter, who has over 30 years of experience, pointed out that due to Wall Street's excitement about generative AI, the US stock market has surged this year, with both the S&P 500 and Dow Jones Industrial Average soaring to historic highs.
Demert said that the upward trend of the US stock market may continue for a long time, partly due to the productivity improvement brought about by AI.
"The recent strength of the market indicates that a new bull market and business cycle dominated by artificial intelligence may last for ten years, thanks to productivity growth and the drive of artificial intelligence," Demeter said in a report on Wednesday.
He pointed out, "Experienced investors know that this broad strength across all industries and capital reminds people of the first year of a bull market in the past, where there is still a long way to go. Of course, adjustments are inevitable along the way."
Dan Ives, an analyst at the US investment bank Wedbush, is also quite optimistic about the potential of AI. He recently stated that Wall Street still underestimates the prosperity of artificial intelligence. He predicts that cloud computing and AI driven spending may drive the technology industry into a new bull market in 2024, with technology stocks expected to rise by more than 20% next year.
However, some market commentators warned that the AI investment boom may be a sign of the formation of a speculative foam market. Since the beginning of this year, most of the gains in the S&P 500 index have been driven by large technology stocks. But in recent weeks, the breadth of market hotspots has improved, which may mean that the market will continue to strengthen.
Other catalysts for the rise of US stocks
Demeter pointed out that the US stock market is still searching for other catalysts that may drive it higher in 2024. The cooling of inflation has led investors to expect the Federal Reserve to significantly lower interest rates next year, which may be beneficial for the stock market.
More importantly, the overall US economy appears to be quite resilient, with Atlanta Fed economists predicting that US GDP will grow by 2.7% this quarter. At the same time, corporate profit growth remains strong, and stock valuations appear attractive.
"We urge investors not to let the recent strength of the market affect your stocks or prevent you from participating. Increasing your holdings during any form of market downturn is the right strategy in the early stages of a bull market. The fundamentals of the stock market are very attractive and may last for several years, not months," said Demeter.
Currently, Wall Street is generally becoming increasingly optimistic about the outlook for the US stock market. Investment banks including Bank of America, Deutsche Bank, and Goldman Sachs predict that the US stock market is likely to set a new record in 2024, with their target price for the S&P 500 index reaching as high as 5200 points by the end of next year.