Tom Lee Says Nvidia (NVDA) Valuation Still Attractive, It's Wrong to Believe We Are Near The End of AI Rally

We recently published 10 Trending Stocks Moving These Days. NVIDIA Corporation (NASDAQ:NVDA) is one of the trending stocks moving these days.

Tom Lee from Fundstrat reiterated his bullish take on the AI rally in a recent program on CNBC and said that the market is still underestimating the potential impact of AI. Lee negated the notion that we are about to go through a market crash seen in the dot-com bubble.

“Well, you know, there’s this thing where people can make like a backhanded compliment, like they might say something positive about the market, but they’re really bearish. Because when I hear people say, “Oh, well, this reminds me of 1999,” or, you know, they’re ringing the bell on the top of AI stocks, they are maybe acknowledging that the market is strong, but then they’re trying to mark the end of that rally. And I think, you know, for me, who was an analyst in the ’90s, people forget that Cisco in September ’98 was at almost a 60 PE when the Fed made its first cut in 9 months, and then its PE went to 200. NVIDIA Corp (NASDAQ:NVDA)is that stock today, and it’s trading at around 27 times forward earnings. I mean, it’s got a lower PE than Walmart and Costco, which are like 35 to almost 50 times. So I just think a lot of good news has been accepted by markets, but I don’t think it’s necessarily priced into markets.”

Nvidia owns about 90% of the GPU market, which is expected to reach $3 to $4 trillion by 2030, according to Jensen Huang. McKinsey sees data center CapEx hitting $6.7 trillion with no slowdown in sight in the short term. Nvidia’s next-generation GPU series Rubin is coming in 2026, and the company also has a software edge in AI computing with its CUDA platform, which is now the de facto standard for AI programming.

Mar Vista U.S. Quality Premier Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its third quarter 2025 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) continues to benefit from the AI infrastructure build-out as hyperscale technology companies race toward artificial general intelligence. Demand for the company’s next-generation Blackwell platform remains strong, driven by the increasing complexity of large language models and the rise of reasoning-based applications. As CEO Jensen Huang has highlighted, reasoning tasks can require up to ten times more compute power than training a conventional large language model. With the AI market still in the early stages of a multi-year investment cycle, NVIDIA is well positioned to capture substantial value as the industry standard in accelerated computing.”

While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.