Gene Munster thinks everyone worrying about an AI bubble needs to relax. In fact, he says all that bubble talk is actually a good thing.
Why? Because it keeps expectations in check and makes a real bubble less likely to form.
Munster just dropped his 2026 predictions, and his big call is simple: the Nasdaq will end the year up 10%, driven almost entirely by AI. But here’s the kicker. He thinks we’re only in year three of a five-year AI bull market.
That means at least two more years of gains ahead.
The AI Spending Surge
Now, Wall Street thinks AI spending from the big tech companies will grow about 33% in 2026. That’s down from 64% growth in 2025, so analysts are basically saying the massive infrastructure buildout is slowing down.
Munster thinks they’re dead wrong.
He’s predicting 50% growth in capital expenditure from Amazon, Alphabet, Meta, and Microsoft. That’s a huge gap from the consensus, and if he’s right, it means the AI infrastructure boom has way more room to run.
Small Caps Get Their Turn
Here’s a contrarian call: Munster thinks small-cap tech will finally outperform the megacaps in 2026.
After years of watching the Magnificent Seven dominate, he’s betting that smaller tech companies under $500 billion will steal the show. The logic makes sense. These companies have been left behind in the AI rally, and if the boom is really going to last several more years, investors will start hunting for the next big winners.
The Magnificent Seven Race
Speaking of the Magnificent Seven, Munster has two different winners picked out.
For the first half of 2026, he’s betting on Apple. The iPhone maker is expected to crush expectations with strong December and March quarter results, plus the launch of a redesigned Siri before April 30. Munster says getting AI right is at the top of Tim Cook’s priority list, which dramatically increases the odds of success.
But for the full year? Alphabet takes the crown.
Munster thinks Google is in the strongest position when it comes to a fully integrated AI stack. Gemini is gaining users faster than OpenAI, Search is integrating AI effectively with ads on the way, and Google Cloud keeps winning in the infrastructure buildout.
No Big AI IPOs
Here’s something interesting. Despite all the chatter about OpenAI, xAI, Databricks, Cursor, and Anduril going public, Munster doesn’t think any of them will actually IPO in 2026.
And he views this as bullish.
Why? Because AI markets typically don’t peak until these marquee companies have already gone public. The longer they stay private, the more room the public AI trade has to run.
The Tesla Paradox
Munster has two Tesla predictions that seem to contradict each other.
First, he thinks Tesla will launch fully autonomous Robotaxis without safety drivers in five cities by year-end. Austin, Dallas, San Francisco, Phoenix, and Las Vegas are the likely candidates. He’s citing Elon Musk’s recent guidance about operations in eight to 10 metro areas.
But second, he thinks Tesla will miss delivery expectations. Street estimates call for 16% growth, but Munster is predicting flat to 5% growth.
How do both work? Simple. Munster argues that Tesla’s investment case has shifted. It’s no longer about vehicle deliveries. It’s about full self-driving, Robotaxi, and Optimus. Miss on deliveries, win on the future.
Meanwhile, he predicts Alphabet’s Waymo will hit one million weekly paid rides by end of 2026. That’s up from 450,000 in December 2025, but still represents just 1.3% of total U.S. ride volume. Translation: we’re incredibly early in the autonomy revolution.
The 2025 Report Card
So how did Munster do last year? He scored himself 4.5 out of 10.
He got these right: Two 10% Nasdaq pullbacks, tariff waivers for Apple and Tesla, IPO market accelerating past 250 listings, and 2025 being the year of custom silicon.
He gave himself a half point for TikTok’s sale being approved but not closed.
And he missed on: Bitcoin hitting $150,000, Russell 2000 Growth outperforming the S&P 500, Uber and Lyft underperforming (they actually crushed it with 40%+ returns), and Tesla launching a $35,000 vehicle.
The Bottom Line
Munster’s core thesis is simple: Wall Street keeps underestimating how long technology adoption curves can run.
Yes, valuations are high. Yes, there’s bubble talk. But if we’re really only in year three of a five-year AI bull market, rotating out of tech now could mean missing the best part of the rally.
The 50% capex growth prediction is the one to watch. If the hyperscalers keep spending at that pace, it validates everything bulls believe about AI infrastructure. If spending slows to 33% like Wall Street expects, the skeptics might be right after all.
Either way, 2026 is shaping up to be another defining year for tech. And Munster is betting the boom isn’t over yet.
Sonia Boolchandani is a seasoned financial writer. She has written for prominent firms like Vested Finance, and Finology, where she has crafted content that simplifies complex financial concepts for diverse audiences.
Disclosure: The writer and her his dependents do not hold the stocks discussed in this article.
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