The stock market is set to continue its bull run for another three to five years before an AI bubble bursts, according to veteran tech analyst Gene Munster.

What Happened: Munster, the managing partner at Deepwater Asset Management, predicts that the stock market will continue to rise due to the increasing adoption of AI technologies. He believes that this trend will drive the market for the next three to five years, reported Business Insider.

“We’re in the early stages of what is a three to five year bull market, and that may seem out of touch given the market run that we’ve had more recently… but if you ultimately believe in the substance of AI is going to be greater than the hype, then the market is going to continue,” Munster told CNBC on Friday.

Despite the recent market surge, Munster remains optimistic about the future of AI-driven stocks. He anticipates that the market’s growth will be fueled by smaller AI-focused companies, rather than just the mega-cap tech stocks.

Munster’s optimism is based on the belief that AI technologies will have a greater impact than the internet. He predicts that the stock market will eventually be inflated by a new class of tech companies, particularly those focused on AI.

However, Munster also warns that this bubble will eventually burst, leading to a painful end to the decade. Despite this, he advises investors not to shy away from owning stocks, as there is still potential for wealth creation in the interim.

“This is going to end in the spectacular bursting of a bubble, but I think there’s a lot of wealth creation that can happen between now and then,” Munster said.

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He also pointed out Alphabet and Meta Platforms ( META ) as unique, flagship holdings in Deepwater Asset Management’s tech-focused portfolio due to their in-house AI technologies.

Why It Matters: Munster’s prediction comes at a time when the stock market is experiencing significant shifts. Just recently, Goldman Sachs forecasted a flat return for the S&P 500 for the remainder of the year, suggesting that the stock market rally for 2024 has peaked.

Additionally, investment strategist Ed Yardeni warned that the Fed’s potential monetary easing through interest rate cuts could unleash a surge in the stock market, potentially propelling the S&P 500 to record highs by the year's end.

On the other hand, JPMorgan‘s Jamie Dimon voiced concerns about the persistent inflationary pressures in the U.S. economy. He suggested that these pressures may lead to a prolonged period of higher interest rates than what investors anticipate.

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