AI Bull Market Expected to Continue for Years, Says Investor

A seasoned investor has asserted that the artificial intelligence (AI) bull market is far from over, predicting it could continue for another two to four years. This statement comes amidst growing concerns about a potential AI bubble, with some market observers questioning the sustainability of the current AI boom.

The investor, who is also the chief executive officer of Intelligent Alpha and an executive partner at Deepwater Asset Management, addressed these concerns by emphasizing that the more critical issue is whether the current bull market has reached its end. The investor firmly believes that the AI market is still in its growth phase and has not yet peaked.

The investor's optimism is supported by a model that predicts strong financial performance for AI chip giant NVIDIA, which is set to release its earnings report. The model anticipates that NVIDIA's revenue and earnings per share will exceed market expectations, despite the company's relatively high price-to-earnings ratio.

The investor acknowledges that while NVIDIA's valuation may appear high compared to other tech giants, it remains reasonable when considering the company's growth potential. Excluding Tesla, the expected price-to-earnings ratio for the six largest tech companies is approximately 28.5 times, while NVIDIA's ratio is slightly higher at over 30 times. However, the investor notes that NVIDIA's growth trajectory is not as aggressive as some of its peers.

Despite the long-term upward trend in AI, the investor cautions that the market will experience periods of volatility, with performance fluctuating above and below average levels. Currently, the market may be slightly overheated, although it has cooled down in recent weeks. This cooling period provides an opportunity to reassess and invest in key AI sectors.

In addition to large-cap stocks, the investor highlighted two investment opportunities. Datadog, a software company closely tied to AI, is seen as a promising investment despite the software industry's poor performance this year. First Solar, a non-AI stock, is expected to benefit from the expansion of U.S. manufacturing, presenting another attractive investment option.

The investor's bullish stance on AI reflects a broader sentiment among market participants who see the technology's transformative potential. As AI continues to integrate into various industries, the demand for related technologies and services is likely to grow, driving further investment and innovation. However, investors should remain vigilant and prepared for market fluctuations, as the AI sector is still in its early stages of development.