In the latest episode of DeepTech315, Deepwater Asset Management managing partners Doug Clinton and Gene Munster discussed the potential impact of inflation and artificial intelligence on the tech market in the coming year.
What Happened: In the episode that was posted on Wednesday, Munster and Clinton touched upon three major topics: Inflation vs. AI, Tesla Robotaxi, and future of AI message by Elon Musk.
During the conversation, Munster highlighted the high Consumer Price Index or CPI numbers, saying that inflation could be a significant factor in the tech market’s future.
The CPI from the Bureau of Labor Statistics is a significant inflation gauge, encompassing the expenses of various goods and services throughout the economy. It showed a 0.4% increase for the month, resulting in a year-over-year inflation rate of 3.5%. This announcement prompted a decline in the three major indexes on Wednesday.
However, Munster noted that despite the current inflationary trend, “Deepwater don’t think a lot about inflation because we want to focus on paradigm shifts and competitive advantage within companies. ”
Responding to him, Clinton said that the mega-cap tech companies could potentially offset the impact of inflation due to their strong AI plays and robust balance sheets. Without naming any big tech names, he hinted that these companies are well-positioned to weather a potential recession. Moreover, Clinton acknowledged that the market may not continue its upward trajectory indefinitely.
“Even if we get a recession, even if we have to get pushed into recession because inflation doesn’t go down to the fed’s 2% goal, I think these companies are in a good spot. Does that mean the stock can just keep going up forever? Probably not,” he stated.
Munster then expressed optimism about the future of AI, suggesting that the pace of innovation in AI deployment is exceeding expectations. He predicted a continued bull market driven by AI over the next three to five years. Clinton echoed this sentiment, saying that the current phase is still the infrastructure build-out and that the true impact of AI on application companies may not be seen until next year.
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Why It Matters: The debate over the potential impact of inflation and AI on the tech market comes during economic uncertainty. Minutes from the Federal Open Market Committee (FOMC) meeting in March have revealed growing unease over the future of inflation, adding to existing concerns about interest rates. This follows a surprise increase in inflation, which has derailed hopes for a rate cut in June.
Despite these economic challenges, Munster has consistently expressed optimism about the future of the AI market, suggesting that it is in the early stages of a bull run that will eventually lead to a bubble. However, the potential impact of inflation on the tech market remains a topic of concern, with some analysts warning of a potential tech rally break if inflation continues to rise.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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