The prevailing sentiment around artificial intelligence, despite its unprecedented surge, often grapples with questions of sustainability and valuation. Yet, Tom Lee, Fundstrat Global Advisors head of research and Fundstrat Capital CIO, posits a distinctly bullish outlook, arguing that leaders in the AI space, notably Nvidia, are not overvalued but rather poised for a significant upward rerating. This perspective, articulated during a recent discussion on CNBC’s Squawk Box, challenges common market skepticism, drawing parallels to past technological shifts and highlighting the profound, yet still unfolding, economic transformation driven by AI.
Lee spoke with CNBC interviewers on Squawk Box about the latest market trends, the state of the AI trade, Bitcoin price trends, and the 2026 outlook. His commentary served as a counterpoint to the growing investor concern regarding the trajectory of growth for both AI and cryptocurrency, suggesting that current market perceptions may be missing the larger, long-term picture. While acknowledging the recent "juggernaut" performance of AI stocks, he contends that the market is still in the early stages of fully appreciating the technology's enduring impact and its implications for valuation.
A core tenet of Lee’s argument for AI stocks is the concept of "visibility" – the clarity of future earnings and growth. He stated, "The AI trade, I mean it's been a juggernaut and we know that the visibility for the next few years is really good, but now investors are just trying to figure out how much to discount, you know, what's the appropriate price to put." This implies that while the immediate future for AI leaders is clear, the market is still wrestling with how to properly value this sustained, high-growth trajectory. The current profit-taking seen in some AI stocks, he suggests, is a natural consequence of investors attempting to recalibrate their expectations, rather than a sign of fundamental weakness.
Lee emphasizes that the business models underpinning AI services are still evolving, moving beyond simplistic subscription fees. The true economic impact of AI, he believes, will come from its ability to fundamentally enhance human productivity. He envisions a future where AI transforms 130 million existing workers in the US into "super workers," a market opportunity he describes as "several trillion dollars just in the US alone." This profound shift in labor productivity and capability, he asserts, will underpin a massive and sustainable market for AI services and infrastructure.
The current phase of AI development, according to Lee, mirrors the "bleeding edge" stages of previous technological revolutions. This is where the underlying technology outpaces the immediate applications. He draws an analogy to the early days of mobile phones, when color screens and keyboards were initially dismissed as novelties, only for the iPhone to later redefine the entire industry. The capabilities of AI are still far ahead of their fully realized applications.
This gap, however, is not a cause for concern but rather an indication of immense untapped potential. Lee firmly believes that "AI stocks, especially stocks like Nvidia, are going to actually rerate higher." He argues that if traditional, predictable retailers like Walmart and Costco trade at 37 to 45 times earnings, then a company like Nvidia, with its foundational role in a rapidly expanding, transformative technology, should command a significantly higher multiple than its current 27 times earnings. The predictability and scale of AI’s future demand justify a re-evaluation of these companies’ intrinsic worth.
Beyond the obvious tech giants, Lee foresees AI fundamentally re-shaping traditional sectors, turning them into technology-driven entities. He points to the banking sector as a prime example, suggesting that institutions like JPMorgan Chase are "criminally undervalued" because they are rapidly becoming technology companies themselves through the adoption of AI. This reclassification, he argues, should lead to a higher valuation multiple, akin to that of a tech stock, rather than being confined to historical banking industry metrics. Goldman Sachs and Morgan Stanley, he notes, have already shown significant strides in integrating technology.
While the discussion primarily centered on AI, Lee also highlighted the long-term potential of cryptocurrencies like Bitcoin. He noted the vast disparity between the current 4 million Bitcoin wallets holding over $10,000 and the 900 million global IRA and brokerage accounts with similar holdings. This, combined with favorable regulatory developments and increasing Wall Street interest in blockchain products, suggests that the "best years" for crypto are still definitively ahead, driven by a market 200 times larger than its current reach.
In essence, Tom Lee’s commentary offers a compelling narrative for investors and innovators to look beyond short-term market fluctuations and perceived growth plateaus. He asserts that AI is not just a trend but a foundational shift, still in its nascent stages of application and economic impact. The re-rating of AI stocks and the transformation of traditional industries into tech-forward entities are not just possibilities, but inevitable outcomes of this profound technological revolution.
