Advances in AI have sent stock prices and the economy soaring for years

• Wall Street experts say AI could provide a significant boost to the economy for years.
• The productivity gains may mirror those seen during the internet boom of the ’90s.
• This means investors could be on the cusp of a big rally in the stock market.

Top market commentators are telling investors that stocks could be on the precipice of a big rally as generative artificial intelligence boosts growth and productivity.

Wall Street’s enthusiasm for AI shows no signs of slowing down any time soon, with tech stocks and AI names contributing to the S&P 500’s streak of record highs so far this year.

And while critics of AI mania have warned that stocks appear overvalued, many market experts argue that the current situation is different from the internet boom of the 1990s.

Here’s what Wall Street’s top pundits think about artificial intelligence and how it could further boost the economy and stock prices.

AI is not a bubble, so stocks could rise 30% next year: Fundstrat

Tom Lee, head of research at Fundstrat, says the AI ​​craze is not another dot-com bubble. That means the S&P 500 could continue to rise to 5,200 this year, and could rise at least 9% in 2024, he predicted.

In a separate note, he added that assuming the Fed continues to cut rates in 2025, stocks could rise another 30% next year.

“There’s a global workforce shortage, there’s a demand for AI automation, and these are seven, maybe eight or nine companies that are providing these solutions,” Lee told CNBC earlier this month. told. “Their market capitalization is growing not just because the U.S. economy is growing, but because they’re actually solving global problems.”

According to a recent McKinsey study, AI could redirect approximately 12 million U.S. workers to other careers by 2030.

AI will drive the economy for the next decade: Goldman Sachs

Goldman Sachs estimates that AI could increase global GDP by 1.5% over the next 10 years. Meanwhile, investment in AI could reach $200 billion by 2025, equivalent to 4% of the overall economy, the bank predicted in a note last August.

“Human creativity and productivity will also increase tremendously as we work with machines to tackle and solve previously prohibitively difficult problems.” Co-Head of Applied Innovation at Goldman George Lee said in a recent CNBC interview. “I think in some ways we will co-evolve with these machines.”

Corporate profits will be boosted: Morgan Stanley

According to Morgan Stanley, S&P 500 companies could see a significant increase in profits thanks to AI. Under the bank’s bull case, net profit margins could rise by up to 50 basis points in 2025.

Groups primarily affected by AI include software, consumer services, and healthcare.

“These groups alone account for more than 30% of the S&P 500’s projected 2025 net income, which speaks to a potential margin opportunity,” the bank said in a recent note.

Nasdaq could double in value: Deepwater Asset Management

Deepwater Asset Management’s Gene Munster believes the AI ​​bull market could continue for the next three to five years.

“There are huge positive factors when it comes to AI,” Munster told CNBC, rating AI 99 out of 100 on his list of top investments. “And ultimately, if this is as big a paradigm shift as I think it is, even if it’s half that size, I think we’ll see a massive doubling of the Nasdaq in the next few years. .”

AI will become “business oxygen” and fuel the market for years: Waddell & Associates

David Waddell, chief investment strategist at Waddell & Associates, said AI could help because of the chronic labor shortage. Combining this technology with robotics could create a wave of virtual workers.

On the other hand, AI mania does not seem like a stock bubble. Other sectors such as financials and health care have outperformed tech stocks this year, suggesting the bull market may continue.

“AI is the oxygen of business, and it’s going to be everywhere,” Waddell said in a recent CNBC interview. “This is not a 10-month story, this is a 10-year story.”

S&P 500 could rise 22% ahead of productivity boom: Sanctuary Wealth

Thanks to AI’s growing impact on productivity, the S&P 500 could rise to 5,800 by the end of the year. Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, said this would mean a 22% annual gain for the benchmark index.

Part of the reason is that AI could eventually have the same effect on the economy as the internet bubble of the late 1990s. Bartels said the S&P 500 rose 220% from 1995 to the end of the decade, largely due to productivity gains.

“We’re bullish on the Magnificent Seven,” Bartels said in a recent CNBC interview. “If you’re managing a portfolio, there’s a lot of risk in not owning some of these stocks. I think so,” he said.