During a recent appearance on CNBC’s ‘Squawk Box,’ Gene Munster, managing partner at Deepwater Asset Management, discussed the outlook for megacap stocks in 2025, with a particular focus on Nvidia (NVDA). Munster expressed confidence in Nvidia’s continued market dominance, suggesting that the company’s growth rates would remain high for an extended period. He highlighted that while market expectations for Nvidia’s growth in 2026 hover around the low 20%, he anticipates it could exceed 30%. This growth, he argued, supports Nvidia’s current valuation at a 25x multiple, which he deems reasonable given the company’s central role in the AI sector.
Munster pointed out that despite the significant gains in the Nasdaq over the past couple of years, the AI sector, particularly Nvidia, still has room to grow. He referenced the user base of ChatGPT, which stands at about 150 million daily users compared to Google’s 2.5 billion, indicating that AI’s market penetration is still in its early stages. This scenario, he believes, will continue to drive demand for tech stocks, especially those involved in AI, into 2025.
Regarding Nvidia’s substantial cash influx, Munster suggested that the company would likely return this capital to shareholders through share buybacks and possibly dividends. He noted that Nvidia doesn’t currently need to pursue acquisitions, making share repurchasing the most straightforward strategy.
When questioned about his personal investment choices, Munster clarified that while he does not personally own Nvidia stock, his firm, Deepwater, does. His personal investments lean towards Apple (AAPL) and Tesla (TSLA) due to his long-term conviction in these companies. He sees Tesla facing a potential short-term pullback but remains optimistic about its AI initiatives boosting its market cap in the long run. For Apple, he predicts stronger growth for the iPhone than what the market currently anticipates, justifying his personal stake in the company.
Munster’s insights underscore a significant belief in sustained growth for Nvidia and the broader tech sector driven by AI, despite the already substantial market gains observed in recent times. His comments reflect a nuanced view on investment, balancing immediate market trends with long-term technological advancements.
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