The tech sector still has legs in the second half, and Deepwater's Gene Munster likes these names

Deepwater Asset Management's Gene Munster anticipates the AI trade will continue driving tech sector performance in 2025, following the S&P 500 tech sector's 23% Q2 surge. He identifies Box and Apple as key picks. Box is seen as undervalued, with Munster projecting 10% growth driven by strong AI agent deployment against Wall Street's 9% forecast, and analysts calling for over 14% upside. Apple, despite a 15% year-to-date decline, is positioned for an upside surprise due to an underestimated iPhone upgrade cycle and low AI expectations, with analysts seeing 8% upside.

Analysis

Deepwater Asset Management's Gene Munster posits that the artificial intelligence investment theme, which propelled the S&P 500's information technology sector to a 23% second-quarter gain, remains in its early stages and has significant runway into 2025. The analysis identifies two specific opportunities: Box (BOX) and Apple (AAPL). Box is presented as an undervalued AI play, with its shares having gained 5% in 2025, outperforming competitor Dropbox's 7% decline. Munster’s conviction stems from Box's superior deployment of AI agents for productivity, projecting growth closer to 10%, which exceeds Wall Street's consensus forecast of 9% for 2025 and 7% for 2026. This view is supported by a consensus analyst price target implying over 14% upside. Conversely, Apple is framed as a contrarian opportunity following a nearly 15% stock decline in 2025 and facing $900 million in tariff-related cost pressures. The bull case rests on two factors: a potentially underestimated iPhone upgrade cycle and a low bar for AI expectations, which could allow the company to surprise investors on the upside despite Wall Street's current lukewarm reception to its AI progress.

Key Decisions for Investors

• Investors should evaluate Box (BOX) as an under-the-radar AI investment, as its AI agent technology may drive revenue growth above the market's current 9% forecast, representing a potential source of alpha.
• For those with a contrarian risk appetite, Apple's (AAPL) recent 15% stock decline and low AI expectations may present a favorable entry point, with potential catalysts from a strong iPhone upgrade cycle and any better-than-expected AI announcements.
• Monitor the execution of AI product roadmaps for both companies, as the investment thesis hinges on their ability to translate AI capabilities into measurable growth and for Apple to successfully manage its significant tariff-related cost headwinds.