Secular Bull Market Won't End with AI Bubble, Says Brian Belski

Brian Belski, CEO and Founder of Humilis Investments, shared his optimistic outlook on the current market, asserting that the secular bull market is far from over and will not be undone by an AI bubble. Speaking on Bloomberg Radio, Belski emphasized the importance of selective investing, particularly in the technology sector, and highlighted the underlying strength in small-cap stocks.

Small Caps and Broadening Opportunities

Belski noted that his firm's outperformance in S&P 500 focused portfolios stems from a selective approach rather than owning everything. He sees significant potential in small-cap stocks, stating that they "are for real." He pointed to their "amazing" inherent fundamentals, including cash flow, earnings, and earnings consistency, suggesting a "long runway to go." This broadens the investment thesis beyond the dominant tech narratives.

AI's Role and Sector Insights

The discussion touched upon the pervasive influence of Artificial Intelligence, with Belski emphasizing that the AI revolution is intrinsically linked to major tech players. He specifically mentioned Microsoft (NASDAQ:MSFT), noting that despite recent pullbacks, the company's role is critical for enterprise AI deployments. Belski anticipates that earnings season will heavily feature growth from hyperscalers like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Microsoft.

The full discussion can be found on Bloomberg Podcast's YouTube channel.

Beyond tech, Belski identified healthcare as a sector with strong potential, citing UnitedHealth Group (NYSE:UNH) as a company that has benefited from disciplined leadership. He also sees the financial sector as being in its "very early stages" of a significant move, with opportunities expanding into small banks, insurance companies, and asset managers.

Market Outlook and Unforeseen Drivers

Addressing concerns about a potential earnings peak, Belski acknowledged the high bar set by first-quarter earnings but remained positive about continued double-digit earnings growth. He suggested that the market's trajectory is driven by more than just immediate earnings, looking at second, third, and fourth derivatives of AI's impact. He also offered a bold prediction about Tesla (NASDAQ:TSLA), stating there's an over 8% chance of an acquisition by SpaceX.

Belski challenged the notion that the market's end would be triggered by a bubble, stating, "I don't see the framework where it ends for Wall Street other than the feds screwing up." He posited that this secular bull market, ongoing since 2009, will likely be ended by something unexpected, such as a new emerging market trend or a commodity supercycle, rather than a typical bubble burst.