A former Morgan Stanley executive says stretched valuations haven’t broken the AI story, and the next stumble may be the moment that matters for market bulls.
In a new CNBC interview, Barbara Doran, founder and CEO of BD8 Capital Partners and a former Morgan Stanley managing director, says the stock market could witness a pullback as valuations are now way above projected earnings for 2026.
According to Doran, any market correction would offer a golden opportunity for long-term investors.
“I think it’s boilerplate. I mean, we’ve seen this before when the markets had a big run. And certainly I would not have been surprised if we’d had a pullback a few weeks ago, because the valuation has been stretched. We are now at 23.6 or 23.7 valuation on next year’s earnings. So the market is incorporating a lot. It’s earnings [are expected to be somewhere] at 13% to 1% next year…
I think all the AI infrastructure activity — and certainly [last] week we had a number of deals announced, particularly around OpenAI, billions and billions with some estimates that we could be spending or could be $7 trillion spent by 2030 on this kind of infrastructure. So I think that gets investors excited about the potential earnings and the productivity increases we’re going to see. So I think this is going to be a buy on any pullback situation.”
Doran also says that the AI trade is different from past market bubbles.
“We’ve seen this in other industries, other times, where the pricing is so attractive people rush in and before you know it, you’re at overcapacity. But I think in this case, it really is different.
The market size is so huge, because you’re still seeing companies adopting, you’re seeing sovereigns, it is just spreading. And as costs do come down and we figure out the power and energy needs and how to accommodate that, you will see it becoming much more widespread.
And certainly you’re starting to hear a lot of companies figuring it out — whether it’s through their agentic, how to maximize efficiency, the automation, the digitization in their companies. So I think this is such a big market that it really reflects on the size and the power, and the duration of what lies ahead.”
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