EXCLUSIVE: Gene Munster Sees Growth Stocks Rising With Lower Rates, Warns Of AI Hype

Zinger Key Points
  • Gene Munster says growth stocks will continue to benefit if rates stabilize or go lower.
  • The tech venture capitalist says AI hype may lead to disillusionment, as has historically occurred many times in tech.

Gene Munster, managing partner at Deepwater Asset Management, joined the "PreMarket Prep" show Monday to share his outlook for megacap stocks. 

When asked if lower Treasury yields will help growth stocks, the tech investor said the playbook over the previous couple of years would suggest so, and he said rates stabilizing and falling is positive for growth stocks.

Munster Cautious On Short-Term AI Gains: The enthusiasm about how artificial intelligence may affect some of these megacap companies has most certainly been factored in, according to Munster. The expert said he doesn't see much upside in Microsoft Corp. MSFT or Netflix, Inc. NFLX

"I would be cautious in business reinventing themselves as AI companies, and the list is long," he told Benzinga Tuesday. 

"There is hype around AI — we've seen this so many times before in the tech sector, and then there is of course the disillusionment." 

The substance of AI will come in the next one or two years, and in five years we'll realize that it's a big deal, the expert said.

Read next: Elon Musk Says We Need a Pause in the Development of Advanced AI

Munster's Positive Growth Outlook For Apple: Apple, Inc. AAPL will continue to move higher in the coming quarters, Munster said. The business in the first quarter of 2023 has likely hit bottom in terms of revenue, and the rest of the year is going to be positive, he said, with the Street expecting a rebound in revenues in the second quarter. 

"We’ll likely see some forms of new products. Innovation is alive and well at Apple, and investors will be upbeat about that," he told "PreMarket Prep."

Improving Margins For Meta? Munster likes Meta Platforms, Inc. META, as he said profit margins still have meaningful room to go higher.

"Meta has been relatively more aggressive with layoffs, which could speak well for upward profit revisions by analysts," he said. 

NVIDIA Starts To Screen Rich Valuations: When asked whether NVIDIA Corp. NVDA has gone too far too fast, Munster said it's easy to see euphoria around this company.

In the short term, Nvidia is starting to show rich valuations, but in the long run, it will stay well-positioned since very few firms are doing Nvidia is doing, he said. 

Gene Munster and Joel Elconin of "PreMarket Prep." Benzinga file photo by Dustin Blitchok. 

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