What 6 Wall Street commentators say AI will do for stocks and the economy

"AI is business oxygen, and it's going to spread everywhere," one Wall Street investment strategist said.

• AI could give a big boost to the economy for years, Wall Street experts have said.
• Productivity gains could mirror those seen during the internet boom in the 90s.
• That means investors could be at the door of a major run-up in the stock market.

The market's top commentators are telling investors they could be on the precipice of a major run-up in stocks as generative artificial intelligence boosts growth and productivity.

Wall Street's exuberance over AI is showing no signs of slowing anytime soon, with tech stocks and AI names helping to drive a string of all-time highs for the S&P 500 so far this year. 

And while critics of the AI mania have warned stocks look overvalued, the current setup is different from the internet boom in the 1990s, many market experts argue. 

Here's what some Wall Street's top commentators think about artificial intelligence — and how it could power the economy and stocks even higher.

Stocks could soar 30% next year as AI isn't a bubble: Fundstrat

The AI frenzy isn't another dot-com bubble, according to Fundstrat's head of research Tom Lee. That means the S&P 500 could continue to rally to 5,200 this year, he predicted, implying at least a 9% gain for 2024.

Stocks could soar another 30% the following year, he added in another note, assuming the Fed continues to cut interest rates in 2025.

"There's a global labor shortage, and there's demand for AI automation, and it's these seven companies, or eight or nine, that are providing these solutions," Lee said, speaking to CNBC earlier this month. "Their market cap's growing not just because the US economy is growing, but they're really solving a global problem."

AI could cause nearly 12 million US workers to pivot to another career by 2030, according to a recent McKinsey study.

AI will power the economy for the next decade: Goldman Sachs

AI could increase global GDP by 1.5% over the next 10 years, Goldman Sachs estimated. Meanwhile, investment in AI could hit $200 billion by 2025 — amounting to 4% of the total economy, the bank predicted in a note last August.

"There's also going to be an incredible in human creativity and productivity as we partner with machines to address and solve challenges that have been prohibitively difficult in the past." George Lee, the co-head of Goldman's office of applied innovation, said in a recent CNBC interview. "In a sense, I think we will co-evolve with these machines."

Corporate earnings will get a boost: Morgan Stanley

S&P 500 firms could see a big surge in profits due to AI, according to Morgan Stanley. Net margins in 2025 could be driven as much as 50 basis points higher, according to the bank's bull case.

Groups that will mainly be impacted by AI include software, consumer service, and healthcare, among other sectors.

"Just these groups alone represent over 30% of the expected 2025 net income for the S&P 500, which speaks to the potential margin opportunity," the bank said in a recent note.

The Nasdaq could double in value: Deepwater Asset Management

Deepwater Asset Management's Gene Munster has said he thinks the bull market fueled by AI could run on for the next three to five years.

"There is a massive positive lever related to AI," Munster said to CNBC, rating AI on a scale of 99 out of 100 on his list of top investments. "And ultimately, if this is as big of a paradigm shift as I think it is — even if it's just half as big — I think you could see the Nasdaq move up considerably, 2x in the next few years." 

AI will be 'business oxygen,' boost markets for years: Waddell & Associates

AI will deliver because of a chronic worker shortage, according to David Waddell, Waddell & Associates' chief investment strategist. The technology, combined with robotics, could create a wave of virtual workers.

Meanwhile, the AI mania doesn't look like a stock bubble. Other sectors, like financials and healthcare, are outperforming tech stocks this year, a sign that the rally could be here to stay.

"AI is business oxygen, and it's going to spread everywhere," Waddell said in a recent CNBC interview. "It's not a 10-month story, it's a 10-year story." 

The S&P 500 could soar 22% ahead of productivity boom: Sanctuary Wealth

The S&P 500 could soar as high as 5,800 by the end of the year, thanks to AI's magnifying effect on productivity. That implies the benchmark index notching a 22% gain for the year, according to Sanctuary Wealth's chief investment strategist Mary Ann Bartels. 

That's partly because AI could end up having the same effect on the economy as the internet bubble did in the late 90s. The S&P 500 surged 220% from 1995 to the end of the decade, largely due to rising productivity, Bartels said.

"We have been bullish on the Magnificent Seven. I think that if you're managing a portfolio, there's a lot of risk to not owning some of these names," Bartels said in a recent CNBC interview.