Fundstrat’s Tom Lee says the US market’s strength isn’t a sign of speculative excess but a reflection of powerful structural tailwinds led by AI and one more catalyst.
In a new CNBC interview, the firm’s head of research pushed back on bubble fears, arguing that investors are underestimating how much the twin forces of AI and blockchain are reshaping both corporate strategy and capital flows.
“At a time when the US is dominating AI, and of course, now we have this big tailwind as blockchain is an initiative that Wall Street is building products on. So I think there are a lot of reasons for investors to stay optimistic.”
Lee looks at Nvidia (NVDA) to illustrate how the current cycle is different from the one witnessed in the late 1990s.
“And I know there’s a lot of talk about bubbles, but I think the thing I would just continue to point out is Nvidia trades at around 27 times forward earnings. It’s still on a PE (price-to-earnings) basis cheaper than Walmart and Costco, which traded around 47 and 34 times forward earnings.”
The investor also says market sentiment plays in favor of market bulls.
“I think with Friday’s sell-off, I saw many people calling the top of the markets or declaring that the bubble is bursting, or that this is the reason to be buying gold. And if investors are that quick to call a top just on a 2.7% decline, I just think a lot of good news isn’t really priced in. I think there’s still a lot of reluctant investors on the sidelines.”
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