Fundstrat’s Tom Lee says AI is creating exponential growth opportunities while blasting stock market bears calling for a top.
In a new CNBC interview, Lee says he doesn’t believe the market top is in, even after megacap technology stocks have slipped in recent sessions.
He points to parallels with the Dot-com era, but notes that today’s environment is very different. In his view, valuations for leaders like Nvidia (NVDA) remain modest relative to their earnings power.
“We’re in a period where there is a supercycle and exponential growth opportunities within AI. But it doesn’t mean every company that has elevated valuation today deserves to actually have the capital, and that company may not even reinvest that capital properly to be a survivor. So, I agree there is going to eventually be a shakeout, but I think valuations are going—strangely enough—are actually pretty reasonable today compared to 1998.
Because 1998 was that liftoff point before that final 18-month surge. And I’d say the best benchmark is Nvidia trades at 26x forward earnings. Cisco, at that same exact moment, was at 60x. And Cisco’s P/E peaked at 210x forward earnings. So Nvidia, to me, is still a bargain at 26x. It’s cheaper than Costco and Walmart, which are close to 50x forward earnings.”
He also says those calling for a sustained market correction will likely be proven wrong.
“Stocks are down three days in a row, AI and MAG7 feeling worse. Many quick to ‘ring the bell’ of a top. This lack of conviction shows pain trade probably higher.”
The S&P 500 dropped to as low as 6,569 this week before recovering. It is now trading at 6,634.
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