Fundstrat
Fundstrat's Tom Lee: AI Mania Out of Hand?
9/25/2025, 9:00:42 PM
Economic Summary
- Billionaire Ken Griffin warned the current AI run has echoes of the dotcom bubble, implying capital may be misallocated and a shakeout could follow.
- Fundstrat's Tom Lee calls AI a super cycle but cautions not every high-valuation company will reinvest capital successfully; he highlights NVIDIA (NVDA) trading at ~26x forward earnings and argues it's cheaper than many retail names on certain historical comparators.
- Michael Sembalist / JP Morgan Asset Management data: AI-related stocks have driven roughly 75% of S&P 500 returns, 80% of earnings growth, and 90% of capital spending growth since ChatGPT's November 2022 launch.
- Monetary policy and inflation outlook matter: Fed Chair Jerome Powell said stocks are "fairly highly valued," Ken Griffin expects maybe one rate cut the rest of the year (outside chance of two), and tariffs-driven inflation is only about 50% through the economy; ISM has been below 50 for 31 months, and a break above 50 would signal recovering capex and broader economic support.
Bullish
- AI is a long-term super cycle with broadening productivity gains.
- NVIDIA is viewed as a bargain at ~26x forward earnings given growth and central AI role.
- If ISM breaks above 50, confidence and capital spending could broaden economic gains and lift equities.
Bearish
- AI frenzy echoes dotcom bubble; many smaller AI-related names may be overvalued and face a shakeout.
- Momentum names have rolled over recently and some stocks show aggressive assumptions, e.g., Oracle downgrade.
- Fed and macro risks persist: stocks described as "fairly highly valued" by the Fed chair, implying vulnerability.
Bullish tickers
NVDA
Bearish tickers
ORCLPLTRTSLA
NVDA
Bullish
Tom Lee calls Nvidia a bargain (~26x forward earnings) with 40%+ revenue growth and critical AI hardware moat.
Bearish
Seen by some as part of AI mania; concern that some investors may be overextending on future bets.
CSCO
Bearish
Used as a late‑90s bubble comparator showing how valuations can become extreme historically.
F
COST
Bullish
Compared in valuation metrics; referenced to show relative valuations versus NVDA.
WMT
Bullish
Referenced alongside Costco as higher on the comparable valuation scale versus NVDA.
ORCL
Bullish
Has rallied strongly (up >30% this month) and benefited from earnings-driven market cap gains.
Bearish
Received a sell initiation at one firm due to aggressive assumptions; down after momentum names rolled over.
PLTR
Bullish
Part of the AI-related cohort that could benefit from broader AI adoption.
Bearish
Viewed as a momentum/AI name with repeated "top" calls and vulnerability to corrections.
TSLA
Bullish
Included in discussions of AI/tech-related market leadership and investor attention.
Bearish
Mentioned among names where commentators have repeatedly rung the bell at the top; exposed to momentum swings.
People mentioned
Ken GriffinTom LeeMichael SembalistJerome PowellScott