Tom Lee Sees AI Stocks Coiling for Their Next Big Move

AI stocks and crypto have nearly stalled in recent weeks, and Lee blames the midterm atmosphere for the pause. The prevailing view in the market is that Democrats are cool toward data centers and the bill known as the Clarity Act. Lee argues the opposite: after the election the opposition will start backing data-center investment, which would lift the midterm pressure weighing on AI shares .

The second leg of the debate is the jobs data. The August report looked like an outlier, while the latest release came in visibly soft. In Lee's reading, that picture shows inflation pressure from the labor market staying weak. If oil prices are brought under control, the inflation problem could fade without growing larger.

That reading connects straight to the Fed path. Markets had priced three hikes, with a 75 percent chance attached to an October move. Soft data should pull the Fed toward the dovish side, and the 10-year bond yield , at 4.75 percent before Jackson Hole, could be seen back below 5 percent. That easing expectation on the rate front reads as positive for risk appetite.

From inflation to valuation: the coiled-spring thesis

Lee points to 8,200-8,400 on the S&P 500 into year end, roughly 9 percent of upside, describing the market as a coiled spring. Third-quarter profit growth is expected near 30 percent, and 2027 earnings revisions are up more than 20 percent since January. The index has lagged those revisions, so multiples have compressed; the market looks cheaper on valuation , not dearer. TradersUnion carries the same coiled-spring reading, writing that Lee expects a sharp move.

Downside risk stays on the table, though. A wobble is possible in the window from mid-October to the vote, and a rolling correction has taken groups down one after another since June 30. With gloomy sentiment dominant, the market can hardly overheat, and cautious positioning could cushion declines. So the pullback is tracked as a calendar risk, not the base case.

The next wave: the software layer

The power to carry technology in the fourth quarter is sought on the software side. Survivors of the SaaS shakeout share something concrete: real transaction data, enterprise distribution strength, and the ability to graft agentic skills onto existing products. That is why names such as Salesforce, ServiceNow and Workday are recovering, with share prices turning back up. Renewable contracts in enterprise software underpin the rebound.

More striking is the new wave of so-called AI-first firms. Tiny teams of 10 to 20 people are generating between 20 million and 200 million dollars of revenue, and startups of that scale sit a few blocks away in San Francisco. A hundred people doing the work of ten thousand is described as exponential scale . In the new wave, small and fast AI-first companies set the pace, not giant payrolls.

Infrastructure spending and the leverage debate

The infrastructure figures are huge: 780 billion dollars committed for 2026, close to 1 trillion for 2027, and a 1.3 trillion projection for 2028. The Moody's revision carried by ComputeForecast lifts the 2026 call to 785 billion dollars, while GoldmanSachs puts the global total at 1 trillion dollars with a 581 billion share for the United States. Amazon's AWS cash and Google's 260 billion in ad revenue can carry that load, and growing through debt is defended as a deliberate choice. Against that, Oracle's 5-year CDS premium at a record 215 basis points after its 70 billion plan stands out in the data compiled by Gate as a leverage warning. The picture sharpens the line between investment appetite and credit risk.

The concrete stories of the day converge on Nvidia shares . AM Intelligence, backed by the Greenko founders, ordered 20,000 more Vera Rubin processors after its first Hyderabad pledge, taking the total to 29,000 and planned capacity to 70 megawatts; LiveMint puts that purchase at about 4 billion dollars. The second signal from the supply chain is stronger: Foxconn's third-quarter revenue rising 47 percent to 3.03 trillion Taiwan dollars carried Nvidia shares to a record 238.90 dollars, according to QZ.com, with the company value nearing 5.6 trillion dollars. Orders and parts makers pointing the same way feeds the rally thesis.

The final headline is fund flows. In weekly trading ARK Invest bought 356,681 Nvidia shares worth about 81 million dollars while shedding 181,767 AMD shares worth 111.1 million; GuruFocus reads the shift as a move reshaping the semiconductor mix of the portfolio. Broadcom and Intellia purchases landing in the same week recall that a single weekly snapshot should not be overread. Funds can trim for profit-taking or portfolio balance, so no verdict should rest on one weekly photograph. The closing message is clear: demand is forecastable, and payback arrives with software consumption.