Nvidia earnings shows 'unrelenting demand', says Fundstrat's Tom Lee

Lee's bull case: Structural AI demand + a multi-trillion dollar wealth effect from future mega-IPOs (SpaceX, OpenAI) will fuel equities into year-end. The 'pullback' was a rolling bear market that already cleansed Mag-7/software. The next one hits cyclicals/value later this year on seasonality & IPO supply, sparing tech. NVDA at 19x is still a buy; the rest of the AI ecosystem is getting frothy. This is a call for continued tech leadership.

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Nvidia earnings shows 'unrelenting demand', says Fundstrat's Tom Lee

ndx

I think the market is pretty healthy... stocks compared to the start of this year have more upside into year end.

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Asks Tom Lee to assess the market post-Nvidia earnings, referencing Chris Harvey's call for an everything rally to 8000.

Scott
Tom Lee

The market is healthy and resilient despite higher oil and yields. The US has a structural driver from AI production and energy independence. The consumer is in good shape. Stocks have more upside into year-end.

Fundamentals are supported by earnings.
Questions the state of the consumer, citing Walmart's cautious outlook and the risk of elevated oil prices.

Scott
Tom Lee

The consumer is K-shaped: higher gasoline/food hurt some, but wealth creation from IPOs like SpaceX and OpenAI (several trillion dollars) will provide a tailwind later this year for equity owners.

The marginal propensity to consume from the wealth effect is significant.
Asks about the AI trade after Nvidia.

Scott
Tom Lee

Nvidia's revenue growth shows unrelenting demand for AI. Users of AI are seeing productivity gains. There is still a shortage of equipment suppliers.

Ken Griffin noted AI could replace many analysts.
Asks if Tom Lee is still calling for a meaningful pullback.

Scott
Tom Lee

We already had a rolling bear market in Mag-7 and software. Later this year, the market will face headwinds: midterm seasonality, petroleum product shortages, and IPO lockup expirations (supply overhang). This will cause a bear market in other stocks, but spare Mag-7 and software.

Stocks that are selling something scarce are working now.
Asks if he is talking about semiconductor stocks.

Scott
Tom Lee

Semis may become a bubble but don't seem like one yet. Nvidia at 19x earnings is still good risk/reward, but other parts of the ecosystem have become expensive.

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