Fundstrat
Fundstrat’s Tom Lee: Tech & AI Momentum Far From Over Post-NVDA
8/28/2025, 7:15:40 PM
Economic Summary
- Nasdaq hit new record highs driven by large-cap tech strength; Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL) and NVIDIA (NVDA) are leading the rally, producing strong momentum in equities.
- Tom Lee argues AI is in the early phase — comparable to the multi-decade wireless adoption — implying substantial room for user and economic penetration and further market upside for AI-related names.
- Current spending is concentrated on AI infrastructure (NVIDIA chips, data centers); this is analogous to historical telecom buildouts (Global Crossing) where early infrastructure builders lost corporate value but later owners and application layers profited.
- A key risk is that many companies are spending heavily on AI without clear near-term profitability improvements; if application-layer monetization lags, firms could reduce spending, slowing the cycle and affecting related equities.
Bullish
- AI is still in the early innings; penetration should grow dramatically
- Big Tech leadership (AAPL, AMZN, GOOGL, NVDA) is powering Nasdaq records
- After infrastructure buildout, application layer will drive real monetization and profits
Bearish
- Heavy AI infrastructure spending may not yet be profitable and could be cut if ROI doesn't appear
- Past infrastructure booms (e.g., Global Crossing) show builders can lose money despite lasting assets
- Momentum rallies can be overbought and vulnerable to sentiment shifts
Bullish tickers
NVDAAAPLAMZNGOOGLJPMGS
Bearish tickers
NVDAGOOGLMETAGLOBAL CROSSING
NVDA
Bullish
Central supplier for AI infrastructure; beneficiary of continued data center and LLM buildout driving growth.
Bearish
High demand has driven heavy investment in NVIDIA chips, but if companies don't monetize AI, chip demand could slow.
AAPL
Bullish
One of the large-cap 'triple A' names contributing to the market rally and benefiting from broad tech strength.
AMZN
Bullish
Big tech heavyweight participating in AI and cloud infrastructure growth, supporting the broader momentum trade.
GOOGL
Bullish
Alphabet is a key AI investor; stands to gain as AI applications and security/use-case layers scale.
Bearish
Heavy AI investment could pressure near-term margins if applications don't quickly generate revenue.
META
Bullish
Investing heavily in AI infrastructure which could pay off as application penetration expands.
Bearish
Large AI spending (referenced as 'the metas of the world') may not translate immediately into profits.
JPM
Bullish
Example of financial firms that can leverage AI to improve business strategy and efficiency.
GS
Bullish
Another bank cited as likely to benefit from applying AI to enhance operations and services.
GLOBAL CROSSING
Bullish
Despite the original firm's failure, the underlying infrastructure eventually proved valuable to later owners.
Bearish
Historical example where massive infrastructure spending bankrupted the original company despite lasting asset value.
People mentioned
Brian SullivanKellyTom LeeChristina Partsenevelis