AI bull market still has ‘another 2-4 years left’ – Intelligent Alpha

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The artificial intelligence sector bull run still has “another two to four years left in it,” according to Doug Clinton, CEO of Intelligent Alpha and managing partner at Deepwater Asset Management.

In an interview conducted by CNBC, Clinton addressed concerns about whether the AI market is in a bubble, noting that the more important question is whether the bull run is over – which he firmly believes it is not.

Clinton’s AI-powered earnings prediction models expect Nvidia (NVDA [https://seekingalpha.com/symbol/NVDA]) to beat estimates on both revenue and EPS when the company reports on Wednesday.

“We’re going to get a maybe sigh of relief with people being a little bit more edgy about AI right here,” Clinton said.

Despite trading at forward earnings multiples that are “a little bit on the higher side,” Clinton believes Nvidia’s (NVDA [https://seekingalpha.com/symbol/NVDA]) valuation remains reasonable compared to other tech giants. He noted that while the “Magnificent 6” stocks – excluding Tesla (TSLA [https://seekingalpha.com/symbol/TSLA]) – trade at about 28.5x forward earnings, Nvidia (NVDA) “is the one that hasn’t expanded as much as the others in the group” with multiples in the “low 30s.”

Clinton cautioned that while the long-term trend for AI remains upward, the market experiences periods where it goes “above the mean and then below.”

He suggested the current market is “probably a little bit above” and “a little bit hot,” having “cooled off the last few weeks,” which gives him “a little bit of pause in some of the real heavy AI things.”

Looking beyond mega-caps, Clinton highlighted two investment opportunities:

Datadog (DDOG [https://seekingalpha.com/symbol/DDOG]) represents an AI-related pick in the software sector, which he noted “has been awful in the tech sector this year.”

His non-AI recommendation, First Solar (FSLR [https://seekingalpha.com/symbol/FSLR]), was selected by his company’s AI model and could benefit from manufacturing expansion in the U.S., with potential announcements coming next month.

MORE ON AI AND THE MAG 7:

* MAGS: Improving Results And Attractive Upside (Rating Upgrade) [https://seekingalpha.com/article/4815368-mags-improving-results-and-attractive-upside-rating-upgrade]
* SPY Or XMAG & MAGS? The Case For Splitting The Index [https://seekingalpha.com/article/4815351-spy-or-xmag-and-mags-the-case-for-splitting-the-index]
* Global Portfolio Managers Bullish, Eyeing A Possible AI Bubble [https://seekingalpha.com/article/4812266-global-portfolio-managers-bullish-eyeing-a-possible-ai-bubble]
* Are generative AI investments worth it? [https://seekingalpha.com/news/4487279-generative-ai-investments-study]
* Another AI focused ETF looks to hit the market from Janus Henderson [https://seekingalpha.com/news/4487157-another-ai-focused-etf-looks-to-hit-the-market-from-janus-henderson]