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Markets are swinging wildly, fear is everywhere, and headlines are screaming recession. But Tom Lee isn't flinching. In his latest interview, the legendary strategist says good stock opportunities are emerging despite market zigzags. With key signals flashing by and inflation cooling in the right ways, Lee believes investors willing to look past the panic could be rewarded.
He's sticking to a bold year-end target for the S&P. And in this clip from CNBC, he breaks down exactly why. I mean, I think I know what you're saying, which is I I do think markets are getting a little desensitized. That's what I mean. Yeah. Yeah. And um and I think part of it is uh if someone had an investor hat on, not tactical hat, you know, really good opportunities are emerging because the number of stocks below the 200 day moving average uh was like 15% historically.
That's a a a strong buy signal. I mean, you're going to find a lot of bargains there. and the VIX got above 50 and it it almost always pays you to buy the stocks when VIX is above 50. But in the near term, it is uh it's a roller coaster. I mean, it does feel like we're uh having a lot of zigs and zags and even over the weekend.
But to me, I think everything that happened over weekend, including the Sunday further explanations, all of this is still unequivocally positive for stocks. Interesting. So, when we were below 5,000 and you were at on the S&P and you were at 7,100, that's like 40%. So, you you're now and you were you high one of the high uh people on the street at 7,100.
Were you there? Well, our our year end originally was 6,600, but we thought we could touch 7,000 midyear. I uh I think the 6600 is still possible, but I do think the 7100 midyear is obviously uh it'd be very difficult to reach, but it's possible. 6,600 by year end. What What What about you've made a lot of good calls based on moderating inflation?
What did you make those numbers at the end of the week? Well, I I think that if we didn't have to consider tariffs, inflation is definitely tracking below expectations. where the Fed wants it almost. Yeah. I mean, core inflation month over month at 0.0056. I mean, that's like literally hitting a wall.
So, is that for good reasons or for bad reasons? I think it's for the right reasons because um Yeah. Well, there's oil and and foods off the boil, but it really is shelter is is actually cooling to a 2% rate, and that is what you need to get inflation back down to two. Do you uh at at this point foresee the worst case scenario in terms of u dollar declines um 10-year yields due to people uh not try the journal had an interesting piece today that it doesn't need to be that people just abandon the dollar and abandon the United States to invest in.
It's just on the margin because it's a given that you cannot ignore the United States as the elephant in the room globally for all these things for the you know the currency investments but on the margin it could make a big difference if if there was even a slight lessening of what what we were used to.
Yeah, I agree. I think I think that is the narrative at the moment that you know US exceptionalism is over and people are selling treasuries and dollars to buy other assets. But I'm I'm not in that camp that it's sustainable because unless weaker dollar and higher yield suddenly makes the best companies in the world outside the US, you know, the best and the most important companies in the world are American companies.
They've produced the best shareholder returns. And you know, if you look at the S&P, 40% of the returns of the S&P come from new companies every 10 years. Is there going to be suddenly the best new company coming out of Europe instead of the US because of the dollar? And I doubt it. And I think US companies are going to adapt.
Tom Lee has highlighted a key market signal. With only 15% of stocks above their 200 day moving average, history suggests a prime opportunity for bargain hunting. This technical indicator signals that significant value and potential gains are emerging as the majority of the market experiences a downturn.
Lee interprets this as an accumulation phase where savvy investors strategically begin to acquire shares in anticipation of the next market upswing. Lee also suggests that the market is becoming desensitized to fear. Initially, negative headlines can trigger strong market reactions, but eventually the market tends to shrug off the panic.
Despite ongoing concerns about tariffs, geopolitical instability, and inflation, the market is demonstrating resilience. When bad news no longer causes significant negative reactions, it often indicates that the worst case scenarios have already been factored into stock prices, creating a situation where potential rewards outweigh the risks.
Additionally, Lee points out that the current decrease in inflation appears to be driven by fundamental improvements, particularly the cooling of housing costs, which has been a persistent driver of inflation. He believes this trend is sustainable and could lead the Federal Reserve to pause or even reduce interest rates earlier than anticipated, a move that historically benefits growth stocks and leading tech companies.
Lee also remains optimistic about the long-term dominance of American companies, dismissing concerns about the dollar's decline or global economic shifts, emphasizing the US's continued production of innovative and high-erforming businesses, which historically drive a significant portion of the S&P 500's growth.
Ultimately, Lee encourages investors to adopt a long-term perspective and consider buying opportunities when others are fearful, seeing the current market as poised for growth, especially in innovative, highquality companies. Let's make this optimistic idea a reality. If Tom's view is correct, and we are in a great time to buy, here is one growth stock that fits this picture perfectly.
Before we jump in, if you're finding this content insightful and worthwhile, a like, share, and subscribe go a long way in helping us reach more viewers and continue delivering highquality analysis. Let's reach 300 likes on this video. Your engagement truly makes a difference. Thank you. The stock is Nvidia with the ticker symbol NVDA, often called the king of artificial intelligence.
Just as Tom Lee suggests looking at the future leaders of the S&P 500, Nvidia is definitely one of them. Even after its stock price dropped by about 26%, Nvidia is still at the center of the AI revolution. Nvidia doesn't need much of an introduction. It's not just leading the AI revolution. In many ways, it is the AI revolution.
This is the company that powers so much of the technology we see coming out from tools like Chat GPT to self-driving systems and everything in between. Yes, the stock has come down from its highest point, but smart investors understand that for top tier growth stocks, these dips often create excellent opportunities to buy in.
This could very well be one of those moments. Here's an interesting fact. Initially focused on graphics processing units for gaming. Nvidia's technology proved to be exceptionally well suited for the complex calculations needed for artificial intelligence, leading to its dominance in this booming field.
Despite worries about economic slowdowns and tariffs, Nvidia's business is largely protected. Here's why. The specific types of advanced computer chips that Nvidia makes are currently exempt from tariffs. Additionally, with the US government prioritizing the production of chips within the country, Nvidia is in a strong position as a key American technology company.
And the field of AI, it's not slowing down at all. In fact, it's speeding up. Just 2 days before the latest news about tariffs, a major AI company, OpenAI, raised a massive $40 billion at a $300 billion valuation. That's not just a news story. It's a clear sign that major players in both the financial world and the tech industry still have huge faith in the future of AI.
So, what does it mean when Nvidia's stock price goes down in this situation? It means there's a chance to get in at a better price. It suggests you might be able to invest in a high-erforming company with a strong competitive advantage. huge demand for its products and support from government policies, all at a less expensive price than before.
The competition to achieve advanced artificial general intelligence is intensifying, and Nvidia is still the key technology driving much of this progress. Looking at the long term, this is a stock that isn't just built to withstand market problems, but is actually positioned to do very well because of them.
. Let's examine Nvidia's financial results and what they tell us about the company's strength. Nvidia reported a massive 126% increase in its revenue compared to the previous year, reaching an incredible $60.9 billion. That's not just growth, it's super fast growth. What's driving this? One word, AI.
More specifically, the revenue from their data center business has skyrocketed thanks to huge demand for Nvidia's Hopper GPU platform. These are the powerful processors that run large language models, recommendation systems, and generative AI, the technologies that create new content. In other words, Nvidia has firmly established itself at the very heart of the AI revolution.
This isn't just a one-time surge. With the adoption of generative AI still in its early stages, this jump in revenue signals the beginning of a growth trend that could last for many years. Nvidia is no longer just a company that makes graphics cards. It's a powerful force in the entire AI infrastructure.
Now, let's talk about profit margins because growth without making money isn't very meaningful. Nvidia's gross profit margin, which is the money left over after the cost of making their products, came in at a very high 72.7%. Up a significant 15.8 percentage points from the year before. That's the kind of profit margin you usually see in software companies, not necessarily in a business that makes physical hardware like semiconductors.
Why is it so high? Because Nvidia dominates the market for high-end computing where they have a lot of power to set prices. Their Hopper GPUs and Infiniband networking technology are cutting edge and command premium prices. Strong gross margins indicate that the company is making sustainable profits and has a strong competitive edge that's likely to last.
This kind of financial strength supports long-term value for shareholders and allows Nvidia to invest heavily in research and development to stay ahead of the competition. And here's where the numbers get really impressive. Nvidia's operating income, which is the profit left after covering operating expenses, exploded by 681% compared to the previous year, reaching $33 billion.
This is a great example of what's called operating leverage. As Nvidia's revenue grows, it's managing its costs effectively, and the result is a highly profitable business. This shows excellent execution by the company. It's not just that they're benefiting from a growing market. They are skillfully managing their business.
High profit margins, tight control over costs, and accurate predictions of market demand are all working together. Now, let's look at the bottom line. Earnings per share or EPS, which is the company's profit divided by the number of outstanding shares. Nvidia's EPS came in at $11.93, a massive 586% increase from last year.
That's not a mistake. That's Nvidia turning its market dominance into real returns for its investors. And this is a number that Wall Street pays very close attention to. With this kind of EPS growth, Nvidia has not only exceeded expectations, but is also in a great position to use its profits in ways that could further benefit shareholders, such as paying dividends, buying back its own stock, and investing even more in innovation.
Nvidia's recent strategic moves underscore its relentless innovation and expansion. Their data center revenue has more than tripled, fueled by the widespread adoption of their Hopper GPUs, which have become the go-to standard for training and deploying advanced artificial intelligence models. Notably, Nvidia has also ventured into the data center CPU market, shipping their first ARMbased processors, signaling their intent to compete directly with industry giants like Intel and AMD.
Looking to the future, the launch of their Blackwell GPU architecture promises to unlock even greater AI capabilities designed to power models with trillions of parameters and usher in a new era of next generation intelligence. Nvidia isn't just relying on one area for growth. It's firing on all cylinders in multiple sectors related to AI, including data centers, automotive technology, gaming, cloud services, networking, and simulation.
Every part of their business seems to be gaining momentum. Whether you're an investor focused on high growth opportunities or someone who looks for value and is starting to see strong fundamental improvements, Nvidia has just become a much more compelling stock to consider. It might be wise to get in before larger institutional investors potentially drive the price up.
I want to know what you all think about this. Drop your thoughts down in the comments. And as always, remember that this stock analysis is food for thought. It's crucial to dig deeper and do your own thorough homework to make sure any investment decisions line up perfectly with your individual strategies and financial goal.
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