Jun 25, 2025 · 1h 0m · big-technology
Tom Lee: Decoding the AI Trade, Bitcoin Predictions & What an AI Black Swan Event Might Look Like
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In this in-depth interview, Fundstrat Chief Investment Officer Tom Lee joins Alex Kantrowitz to analyze the macroeconomic resilience of equity markets, the reality behind the AI investment boom versus historical tech cycles, potential AI black swan risks, and the long-term outlook for robotics and digital assets.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Alex holds 30.1% of the talking time here. How this is scored →
Alex as informed peer 4.3 Guest teaching 6.0 Guest disagreement 1.7 Alex pushing back 3.1
speaking balance: gold is Alex, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 33:40 Tom labels Fed liquidity reliance a myth
Tom forcefully rejects standard market consensus, stating that relying on Fed easing for market recoveries is completely misguided.
Hardest push from Alex ▶ 4:21 Alex holds Tom to his original questionAlex refuses to let Tom give a vague 'yes and no' answer about AI's market impact, pointing out S&P gains since ChatGPT to make Tom take a clear stance.
Biggest teaching moment ▶ 11:37 Tom explains bank money movement rulesTom educates Alex on how global banks cannot simply move money internally due to regulatory rails like OFAC and FinCEN.
Alex holds their own ▶ 47:05 Alex formulates a theory of anti-automation violenceAlex displays strong technological analysis by linking warehouse automation displacement directly to symbolic public unrest against autonomous vehicles.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Alex as informed peer | Guest teaching | Guest disagreement | Alex pushing back | Why |
|---|---|---|---|---|---|---|
| Narrative Dynamics and Macro Drivers in Market Valuation | 5 | 6 | 2 | 6 | Alex pushes Tom repeatedly on whether AI is genuinely powering market valuation or if it is just hype, citing S&P gains since ChatGPT. Tom explains the mathematical nuance between earnings growth and multiple expansion, demonstrating how macro factors like monetary policy anchor price moves. | |
| Black Swan Events and Supply Chain Market Sensitivity | 3 | 7 | 1 | 2 | Tom lists five recent black swan shocks and explains the manufacturing-heavy nature of the S&P 500. He educates Alex on how financial institutions must move money through external intermediary supply chains to comply with OFAC and FinCEN rules. | |
| Potential AI Black Swans and Historical Technology Cycles | 4 | 6 | 2 | 3 | Alex questions what happens to private valuations if AI stalls, citing OpenAI and SoftBank capital commitments. Tom uses the historical wireless industry cycle to explain how tech ecosystems peak one-third into their lifecycle before value consolidates in a few breakout winners. | |
| Valuations, Historical Fiber Overbuild, and Post-Labor Economics | 4 | 6 | 2 | 4 | Tom draws parallels to the late-90s telecom fiber overbuild, noting how excess capacity eventually enabled downstream giants like Netflix and Expedia. Alex challenges Tom on why he views post-labor abundance through a dystopian lens rather than a utopian one. | |
| Market Forecasting Methods, V-Shaped Recoveries, and Geopolitics | 4 | 7 | 3 | 3 | Alex asks how Tom predicts short-term market reversals during geopolitical stress such as the Iran strike. Tom explains his quantitative methodology using high-yield credit spreads and historical waterfall declines, dismissing the conventional belief in Fed liquidity as a requirement for recovery. | |
| Trade Policy, Manufacturing Regulations, and Humanoid Robotics | 6 | 5 | 1 | 2 | Tom details domestic EPA regulatory obstacles that incentivized manufacturing offshoring, while Alex demonstrates domain expertise by synthesizing the shift to robotic automation with real-world social pushback, citing Waymo burnings in LA. | |
| Magnificent Seven Divergence and the Granny Shots ETF Strategy | 4 | 5 | 1 | 2 | Alex runs through year-to-date performance figures across the Magnificent Seven to ask about AI divergence. Tom explains his thematic investing strategy behind the Granny Shots ETF, highlighting how cross-theme overlap outperforms traditional single-stock picking. |
Statements from this episode (24)
Tom Lee: Much of Tech CapEx Is Maintenance, Not AI
“Not a hundred percent of tech spend is AI. A lot of it is maintenance CapEx and expansion CapEx and, you know, the catch up for spending that's been deferred because of COVID, et cetera.”
Tom Lee: AI Innovation Is Only Happening in the US and China
“Really, there are, there's only two places where AI innovation's taking place, is the United States and China.”
Tom Lee: AI Drives Market Narrative, Not Fundamentals
“But that's different in my opinion than AI is driving the stock market. Like it's driving the narrative, but it's not necessarily driving the market.”
Lee: Narrative drives stocks more than earnings over the intermediate term
“So I think that in like a very simplistic sense, narrative drives stocks more than earnings do over the intermediate term.”
Tom Lee: Stock valuation reflects customer trust rather than pure earnings
“I believe Tesla and Palantir and stocks like HIMSS are proof that money, money is not how you measure the value of a stock. Because if money is, is determined as the earnings per share, the value of a company isn't just The amount of money that it represents. …”
Lee: S&P 500 earnings grew despite major post-2020 macroeconomic shocks
“Four of four of those events should have caused a lot of companies to fail or earnings to decline. S&P earnings grew that entire period.”
Lee: S&P 500 revenue depends primarily on manufacturing supply chains
“Well, you know, it's, we part, something to keep in mind is the S&P. 500 is a lot more sensitive to the manufacturing economy. So even though, like we say, the U.S. Is a services economy, and most of what we do is like services, actually most of how S&P makes …”
Lee: Banks cannot internally transfer funds due to OFAC and FinCEN
“In fact, if you're a global bank, so take Barclays or JP Morgan, and you have money in, let's say Japan, and you want to move it to the US, you have to use an external intermediary to move the money. Banks can't internally transfer the money because it violate…”
Lee: The AI Market Bubble Will Eventually Burst
“The bubble bursts in AI. And I think that's going to happen for sure.”
Lee: AI Sectors Will Peak Simultaneously One-Third Into the Cycle
“Everything's gonna peak at the same time, probably one third into the cycle, but then in that period of consolidation and shakeout, then one or two industries truly pull away and capture the value again.”
Lee: Dot-Com Recession Would Have Been Mild Without 9/11
“The reason we had a bigger recession after that was because of nine 11, but it really would have been a mild recession.”
Lee: Nvidia's 30x Earnings Valuation Is Reasonable Compared to 1990s Toyota
“You know, NVIDIA is not crazy today, you know, because it's 30 times earnings, which is not a premium. I mean, Toyota traded at 40 times earnings for years in the nineties just making cars, and NVIDIA is not making a car. You know, they're making a really diff…”
Lee: Waterfall stock market declines almost always produce V-shaped recoveries without recessions
“Almost every waterfall decline is a V-shaped bounce unless there's a recession. So that's why we got so keyed up on this high-yield market, because if we fall, but we don't have a recession, that just means you, everyone just panicked. They did a fire-ready ai…”
Lee: Federal Reserve Liquidity Is a Myth for Stock Market Recoveries
“The Fed liquidity is a myth. You don't need Fed liquidity for stocks to recover.”
Lee: Investors should sell the war buildup and buy the invasion
“When it comes to war, you sell the buildup into war, but you buy the invasion. Right. Or they say you buy when the guns fire, you know what I mean? And, but that's true. So we were advising our clients that you sell the buildup, but you buy the invasions.”
Lee: Tariffs cannot curb Chinese economic power as supply chains relocate
“And if anyone tries to use tariffs to harm China from gaining economic power, we know it can't work because it's supply chains can move.”
Lee: Only China, US, Japan, and Germany will build humanoid robots
“Yeah, it's gonna only be three, maybe four countries. It's China, USA, Japan, and Germany.”
Lee: Western robots will see wider adoption over safety concerns
“I would say over time there is going to be concern about the ethical safety of a robot, and that's why I think a Western developed robot will be more widely adopted than a non-US one.”
Lee: Netflix should be considered an AI winner
“One name you probably didn't mention but should be considered an AI winner is Netflix.”
Lee: Apple may lag early AI before taking market lead
“Apple might Do what they did in, oh, two and seven. They weren't cutting edge and making the first mobile phone, but they, in 2007, after the bubble burst, introduced the iPhone, and so, maybe they'll wait for AI valuations to come down, or the, you know, the …”
Lee: Thematic investing drives market performance more than macro or stock-picking
“Thematic investing explained performance better than macro and stock picking. So meaning, it's better to identify the things driving the market and own the strongest stocks”
Lee: Tether Is the World's Third Most Profitable Financial Institution
“And so Tether, from a net income basis, makes more money than most financial institutions. I think it's, would be the third most profitable financial institution in the world.”