Tom Lee: Nvidia Valuation Still Low, Some AI Stock Weakness May Be Due to Funds Rotating Into Nvidia

BitMine Chairman Tom Lee said on CNBC that Nvidia's stock rose after reporting strong earnings, breaking the recent pattern where positive earnings reports failed to lift share prices, indicating investors still value company fundamentals. Software stocks including Salesforce, CrowdStrike, and Okta also strengthened in tandem, reflecting a positive market response to AI downstream trades, with the overall market reaction being relatively healthy.

Regarding weakness in AI-related stocks such as Meta, Amazon, Alphabet, AMD, and Micron, Tom Lee believes some investors who were previously underweight Nvidia may need to sell other tech stocks to fund increased Nvidia positions. He noted that Nvidia's earnings expectations have been significantly revised upward, but the stock price has not fully caught up, with the price-to-earnings ratio still contracting, suggesting the current valuation remains low.

Tom Lee also said that data center construction is gradually becoming a political issue in the U.S. midterm elections, and even some Republican-governed states and states supportive of data center development are beginning to consider pausing related projects, which could be one reason why AI infrastructure-related stocks have underperformed recently, with funds rotating more toward AI downstream targets.