Gene Munster Reckons AI Is In its 2nd Innings Not 3rd, Says Wall Street Misreading Big Tech Spending As Likes Of Meta And Google Pour Billions

On Tuesday, Deepwater Asset Management's Gene Munster argued that investors are underestimating how close artificial intelligence is to a breakthrough in real-world utility.

AI Is Earlier Than Investors Think, Munster Says

Munster's comments come as shares of major technology companies have faced pressure amid concerns that once capital-light businesses are becoming permanently capital-heavy due to AI infrastructure demands.

Meta Platforms, Inc. (NASDAQ:META) shares fell 2.54% over the past five days, while Amazon.com, Inc. (NASDAQ:AMZN) dropped 13.35%. Alphabet Inc. shares also declined, with Class A (NASDAQ:GOOGL) down 7.06% and Class C (NASDAQ:GOOG) off 7.28%.

"A year ago I thought we were in AI's third inning," Munster wrote on X. "I now believe we're in the second."

Wall Street Focused On CapEx, Not AI Utility

Speaking on CNBC's Squawk Box, Munster said headlines around debt issuance and surging capital expenditures miss the bigger picture.

"These are the most competent companies in the world when it comes to understanding AI," Munster said, pointing to Meta and Alphabet as examples of firms already seeing tangible growth benefits.

The underappreciated piece is that these companies are growing more confident that AI's utility will ultimately deliver a return on investment, he said.

A Breakthrough Is Closer Than Expected

Munster pushed back on long-term timelines often attached to AI adoption, arguing that meaningful utility could arrive within six to 12 months.

"I think we're at the doorstep of what will be a breakthrough in terms of the utility of AI," he said, adding that markets are struggling to price what that shift will mean.

Why Elevated Spending Could Last A Decade

Munster also said that investors should prepare for five to 10 years of elevated capital spending, driven not just by model training but by inference — the real-time "thinking" that powers AI applications.

"AI is not training. AI is thinking," he said, noting that inference demand could dwarf current infrastructure spending.

Meta expects 2026 capital expenditures of $115 billion to $135 billion. Amazon plans to invest about $200 billion in 2026, while Alphabet forecasts capital spending of $175 billion to $185 billion.

Amazon shows a weak price trend across all time horizons and ranks poorly on Momentum, according to Benzinga's Edge Stock Rankings.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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