One of Wall Street’s most bullish strategists says the US stock market is nowhere near an AI bubble.
In a new interview with Anthony Pompliano, Lee compares today’s AI-driven optimism to the late-1990s dot-com era, saying the fundamentals don’t support bubble talk.
According to the market strategist, AI stocks may actually be undervalued at current levels.
“If we’re measuring bubbles, based on like risk reward, we’re pretty far from it. Because in 1998, September, which is similar to today because the Fed was on pause, and then they started cutting again, September 98. Cisco, which was the biggest company at the time, was trading at 56 times forward PE (price to earnings).
18 months later, it got to 210 times. Now, Cisco made a commodity router that had many competitors. Nvidia today is the singular most scarce company in AI. They make a chip that everyone who is building a premier model needs. It’s trading at 27 times forward earnings.”
Lee says investors have underestimated how battle-tested markets have become, pointing to a string of rare global shocks that failed to derail profit growth.
“In the last five years, we had six black swans. We had Covid, we had the supply chain bullwhip effect, we had an inflation bubble and the Fed’s fastest hikes in history. We had the tariff terrors and the US bombing Iraq’s nuclear facilities, six black swan events. And the market grew earnings during that time, I would argue PE should be higher because we just battle tested the stock market.”
He notes that earnings remain strong and broad, with most major firms continuing to beat estimates even in a supposedly late-cycle phase.
“Even this quarter, 85% of companies are beating results right now. And it’s still going to result in basically 15% earnings growth. I mean, so that’s not late-cycle earnings growth, late-cycle would be single digits.”
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