AI-Driven Bull Run: Gene Munster Recommends Buying Big Tech, Especially Apple and Nvidia
Deepwater Asset Management’s Gene Munster is bullish about the tech sector, predicting a three-to-five-year bull market driven by artificial intelligence (AI). He specifically recommends buying the "Magnificent Seven", a group of large-cap tech stocks, with a particular focus on Apple Inc. (AAPL) and Nvidia Corp. (NVDA). Munster believes these companies are poised for significant upside in the coming years.
Key Takeaways:
- AI-Fueled Bull Market: Munster argues we’re in the early stages of a long-term bull market driven by AI.
- Near-Term Catalysts: He expects tech stocks to rally in September due to upcoming events like Tesla’s autonomous vehicle event and Apple’s AI-focused iPhone 16 launch.
- Apple’s AI Upgrade Cycle: Munster compares Apple’s new AI features to the introduction of larger screens in the iPhone 6, expecting a significant upgrade cycle that will drive Apple’s stock higher.
- Nvidia’s Dominance in AI Chips: Despite recent share price decline, Munster sees Nvidia as well-positioned for the long-term bull market due to its dominance in the AI chip market.
- Blackwell Delay Misunderstanding: He believes Nvidia’s recent guidance reflects a misunderstanding of the impact of Blackwell delays, which are actually beneficial for the company’s long-term growth.
AI Drives Tech’s Long-Term Growth
Munster’s bullish outlook on big tech is driven by his belief in the transformative power of AI. He sees the current market as the beginning of a prolonged upswing, fueled by AI’s increasing integration into various industries.
"I am a buyer here. I continue to believe we’re in the first stage — this may be hard to wrap many heads around — first stage of a three-to-five-year bull market," Munster said on CNBC’s "Squawk Box".
September Catalysts to Fuel Tech Rally
While Munster’s long-term vision is rooted in the AI revolution, he identifies several near-term catalysts that are likely to fuel a tech rally in September.
Tesla’s Autonomous Vehicle Event
Anticipation surrounding Tesla Inc.’s (TSLA) upcoming autonomous vehicle event is expected to build momentum this month. Munster expects investors to reassess their outlook on Nvidia, which is a key supplier for Tesla’s self-driving systems.
Apple’s AI-Focused iPhone 16 Launch
Apple’s September 9th event, where the company is expected to unveil new AI features for its smartphones and introduce the iPhone 16, is a major event in Munster’s eyes. He believes the new AI functionality has the potential to trigger a massive upgrade cycle, similar to the surge in demand following the iPhone 6’s larger screen introduction.
"I think when you put those three kind of cornerstone elements together, I think you are going to continue to see the tech trade move higher in the month of September," Munster said.
Apple’s AI Upgrade Cycle: A Repeat of iPhone 6?
Munster views Apple’s upcoming AI features as a potential game-changer, comparing them to the iPhone 6’s larger screens, which spurred a massive upgrade cycle. He expects these new features to be seen as "must-haves" by consumers, driving a substantial surge in iPhone upgrades and boosting Apple’s stock.
"Ultimately I believe that this can go much higher. I think if you look at what happened [with the iPhone 5] a decade ago, it was up 12%. With the iPhone 6, it was up 52%, it just absolutely ripped," Munster said.
Based on his bullish outlook, Munster projects that even if only 10% of iPhone users who were expected to upgrade in 2026 decide to upgrade early in 2025 due to the new AI features, iPhone sales growth could jump to 15% next year, exceeding Wall Street’s estimates of 7%.
"I think consumers, overwhelmingly, are going to embrace these features. It may take a few quarters, but I think you are going to see meaningful upside at Apple over that period," he said.
Nvidia’s Dominance in AI Chips: A Misunderstood Opportunity
Despite a recent decline in its share price, Munster remains confident about Nvidia’s long-term prospects, citing its dominant position in the AI chip market. He attributes the stock’s drop to a misunderstanding of the company’s guidance.
Nvidia guided up by 2.5% for the October quarter, but raised guidance by 5% in the July quarter. This has created a narrative of deceleration, according to Munster. However, he believes this narrative overlooks the impact of Blackwell delays, which account for about $3 billion.
"If Blackwell wasn’t delayed, Nvidia would have guided up by 12% instead of 2.5%," he said.
Munster maintains that Nvidia is well-positioned for growth, even with the delay, and that the share price remains reasonably valued. He expects the company to outperform Wall Street’s expectations in 2025 and 2026, fueled by increasing AI investments.
"We think that it is still reasonably priced at 35 times [earnings] and can grow faster than what the Street thinks next year and in 2026. Ultimately, the risk for big companies not to invest in this is just too high and Nvidia is going to be a big beneficiary of that," Munster said.
The AI-Driven Tech Rally: A Time to Buy?
Munster’s bullish outlook on big tech, particularly Apple and Nvidia, reflects a growing sentiment that AI is about to transform the global economy. If his predictions are correct, the coming years could see a significant surge in tech stock valuations as companies continue to invest in and adapt to the AI-fueled future. This makes his recommendations worth considering for those seeking long-term growth in their investment portfolios.