The prevailing sentiment among tech insiders and investors often oscillates between fervent optimism and cautious apprehension, especially concerning a transformative force like artificial intelligence. Yet, as Deepwater Asset Management’s Managing Partner Gene Munster recently articulated on CNBC’s "Closing Bell," the peak of the current AI market cycle remains distant, predicated significantly on the future public offerings of leading AI innovators. This perspective offers a crucial lens for founders, venture capitalists, and AI professionals evaluating the long-term trajectory of the sector.
Scott Wapner, hosting CNBC's "Closing Bell," engaged Gene Munster in a discussion spanning the immediate prospects of companies like Broadcom and the broader AI trade outlook through 2026. The conversation sought to delineate whether the tech sector's robust performance of the past year, particularly in AI-related stocks, is sustainable or if a period of deceleration is imminent. Munster's analysis, grounded in fundamental shifts in technology and market dynamics, points towards continued expansion.
Central to Munster’s immediate analysis was Broadcom, a company Deepwater Asset Management holds. Ahead of its earnings report, Munster expressed confidence, noting that "this story is all about accelerating growth rate." He highlighted the importance of custom silicon, a key driver for Broadcom, and the increasing number of "qualified customers" — a metric he stressed as vital for investors to monitor. Broadcom's trajectory of moving from three to five qualified customers, including the addition of OpenAI, signals a significant uptick in demand for specialized AI hardware. This growth in major clients, such as Apple, Microsoft, and Amazon, directly translates to a meaningful impact on the company's accelerating growth rate, with expectations of exiting next year at a 50% growth rate.
This micro-level insight into Broadcom's customer acquisition and custom silicon business serves as a microcosm for the broader AI infrastructure buildout. Hyperscalers are investing heavily, a trend Munster expects to continue robustly. He projects hyperscaler capital expenditure (CapEx) growth to exceed +50%, a figure significantly higher than the street's consensus of 33%. This aggressive investment underscores the foundational shift occurring across the tech landscape, where companies are re-architecting their infrastructure to support burgeoning AI capabilities.
The sustained investment in AI infrastructure is not merely a short-term trend; it represents a multi-year buildout. Munster emphasized that this infrastructure development will persist throughout calendar year 2026, creating a durable tailwind for companies supplying the foundational components. Such a prolonged investment cycle suggests that the current AI wave is more akin to a foundational technological revolution rather than a fleeting speculative bubble.
Perhaps Munster’s most salient insight concerned the market’s overall peak. He stated unequivocally, "It's unlikely the market peaks until these companies have gone public." This observation is a powerful indicator for the startup ecosystem. The fact that many of the leading, most innovative AI companies remain privately held means that a substantial portion of the AI sector's potential value has yet to be publicly realized. Their eventual IPOs will likely inject fresh capital and renewed investor interest into the public markets, sustaining the broader AI trade. This is a positive sign for the AI trade.
Munster acknowledges the "continuing concern from investors that we're one week, one month away from this all ending." However, he believes this apprehension will begin to subside as the tangible benefits and sustained growth of AI become even more apparent. The narrative of an impending crash, while ever-present in rapidly expanding sectors, does not align with the fundamental and infrastructure-driven nature of the current AI revolution.
The long-term outlook for AI remains compelling, driven by underlying technological advancements and strategic corporate investments. The market's current phase is characterized by a foundational buildout, with significant value yet to be unlocked from private enterprises poised for future public offerings. This robust, infrastructure-led expansion suggests a sustained period of growth for the AI trade.
