Despite the tech sector's impressive growth, with the Nasdaq gaining 29% in 2024 and major tech stocks significantly contributing to the S&P 500's returns, Munster warns of an impending slowdown. He suggests that the market will start to unravel when tech giants like Nvidia fail to meet investor expectations, leading to nervousness and a potential unwinding of the tech trade. While some forecasters warn of a significant market correction, most strategists expect continued, albeit slower, gains in the coming years.
Key takeaways:
- The tech stock bubble, driven by AI, is expected to last another two to three years before bursting, according to tech analyst Gene Munster.
- Munster predicts a potential 30% decline in the Nasdaq Composite when the bubble bursts, with hardware stocks like Nvidia facing the most severe losses.
- The Magnificent Seven group of tech stocks is expected to see significant earnings growth in 2024, but this growth is anticipated to slow down in the following years.
- Warnings of a stock market bubble are increasing, but most strategists still expect stocks to gain, albeit at a slower pace than in previous years.