Tom Lee: Nvidia's Valuation is Low, AI Stocks Weaken Due to Funds Shifting to Nvidia

On August 30, Tom Lee, chairman of BitMine, stated on CNBC that Nvidia's stock price rose after the company reported strong earnings, breaking the trend where positive earnings reports fail to drive stock prices higher, indicating that investors are focusing on the company's fundamentals. Software stocks such as Salesforce, CrowdStrike, and Okta also saw gains, reflecting a positive market response to AI downstream transactions, suggesting a healthy overall market reaction. Regarding the weak performance of AI-related stocks like Meta, Amazon, Alphabet, AMD, and Micron, Tom Lee believes that some investors are underweighting Nvidia and may need to sell other tech stocks to raise funds for increasing their Nvidia holdings. He pointed out that Nvidia's earnings expectations have been significantly raised, but the stock price has not fully caught up, and the price-to-earnings ratio is still contracting, indicating that the current valuation remains low. Tom Lee also mentioned that data center construction is gradually becoming a political issue in the U.S. midterm elections, with some Republican-led states and states supporting data center development beginning to consider pausing related projects. This may be one reason for the recent poor performance of AI infrastructure-related stocks, as funds are shifting more towards AI downstream targets.

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