Despite elevated inflation, volatile interest rates, and rising geopolitical risks, "stocks are the place to be," according to Wharton professor Jeremy Siegel.

Siegel told CNBC on Monday that investors should continue to favor stocks over bonds as economic growth stays strong thanks to productivity growth, partially enabled by the growing adoption of artificial intelligence.

Siegel observed that America's GDP growth in 2023 is about double the GDP growth of 2022 even as job gains this year are only half of the job gains seen last year. That dynamic highlights the current environment of productivity growth as company's get more efficient.

"I think the promise of AI is real. This year, our growth is being driven by productivity... productivity driven growth brings inflation down, it's good for earnings, but it does drive yields up. Higher real growth, more borrowing, more capital investment, I want to be in stocks and not bonds," Siegel said.

And if higher bond yields are being driven more by America's ongoing deficits rather than strong economic growth, that likely means inflation will be higher in the future. Still, that scenario plays into Siegel's mantra of "stocks over bonds."

"With big deficits, where would you want to be? Stocks or bonds? You would want to be in stocks," Siegel said, alluding to the fact that stocks have historically been great hedges against inflation over the long-term.

Rising geopolitical risks amid the Israel-Hamas, Russia-Ukraine, and China-Taiwan conflicts, also aren't enough to scare Siegel out of stocks. In fact, he views those risks as reasons to buy stocks, not sell them.

"The geopolitical problems are usually opportunities to buy if we look back at history. Clearly things could get worse in the Middle East before they get better... what is the most famous saying in the [market]? That stocks climb the wall of worry, and when there's no clouds in the sky you're buying too high. I really think geopolitical risk is in the long run an opportunity to buy stocks, not to sell stocks," Siegel said. 

Siegel pins most of the blame for the S&P 500's 8% decline since July on higher interest rates as the 10-year US Treasury yield approaches the 5% level, but to Siegel, those higher rates are being driven by stronger than expected economic growth, which should bode well for corporate earnings going forward.

On top of that, the stock market can handle elevated interest rates, according to Siegel.

"In the long picture, these real yields although certainly higher than they've been in the last 10 to 12 years, are not high in terms of history. And if we have real growth that's the source of these higher yields, I don't think that's a negative for stocks," Siegel said.