00:14:41 · Tom Lee
[00:14:41] S5: Well, I think, you know, part of the confusion around Anthropic is really its its revenue policies and how they treat... You know, like, what you and I would consider, like, subscriber and organic and unit growth is not necessarily how they're reporting revenue. And so it affects the growth of sequential. And you know what? They'll probably learn that as a public company. And another thing to keep in mind is that, when it comes down to the fullness of time, when we look back at the Internet cycle and mobile cycle, the long term winners might actually be second wave companies, you know, downstream companies. So, like, in other words, OpenAI and Anthropic are the frontier companies. They're not that dissimilar to Netscape and, Cisco. But were those companies the ones that you made money on in the next ten years? It's... It'll be TBD because, actually, the history shows downstream did better. The post Internet downstream companies were companies like Netflix, you know, eBay, Expedia, Tower Stocks, Apple. Apple wasn't even in the first wave of Internet and mobile. You know, they didn't launch a product until 2007, which is thirteen years after the launch of Internet and after the bubble had burst. So I think, you know, we probably have to have some flexibility to say, is is my personal investment, how am I gonna make money in AI? It it may not be through Anthropic or OpenAI. It may be, though. So I'm not. But, you know, it end up being a company like SpaceX or Apple as the long term winner.
00:16:20 · Ed Elson, Tom Lee
[00:16:20] S4: Just going back to our previous episode when we had you on in July, your prediction was that the S and P would hit 8,000 by the end of the year, but not before we saw a significant correction in the fall, and your expectation was that stocks would come come back after that correction. Seems like maybe we're... We could call this the correction. Do you feel that your prediction is tracking? Do you still think, that we'll hit 8,000? That'll be around five and a half percent higher than where we are now. [00:16:49] S5: Well, one thing I'd point out is, like, I know when I was last on your show and I mentioned that possibility of a correction, many people were very dismissive because the market had a lot of momentum at the time. And I think that's what we have to be wary of is that when the market's strong, people can never see a big correction ahead. I do think we're now in this correction that I was mentioning because, like, memory is down almost 50%, and the AI trade's down more than 20. And as you point out, Nasdaq's down 10. But I think we're at the end of that sell off. I think the rally into year end will be even stronger. I think we could be at 8,200, maybe even 8,400 by the end of the year. So I think we're gonna rally above what I thought originally.
00:16:49 · Tom Lee, Ed Elson
[00:16:49] S5: Well, one thing I'd point out is, like, I know when I was last on your show and I mentioned that possibility of a correction, many people were very dismissive because the market had a lot of momentum at the time. And I think that's what we have to be wary of is that when the market's strong, people can never see a big correction ahead. I do think we're now in this correction that I was mentioning because, like, memory is down almost 50%, and the AI trade's down more than 20. And as you point out, Nasdaq's down 10. But I think we're at the end of that sell off. I think the rally into year end will be even stronger. I think we could be at 8,200, maybe even 8,400 by the end of the year. So I think we're gonna rally above what I thought originally. [00:17:34] S4: Just before we wrap here, midterm results will be in when this airs. You mentioned that there might be concerns that if we have a democratic sweep, then that would... Might mean a wave of anti AI or anti data center legislation. Talk a little bit more about that, but also what are your expectations for after the midterms? Because your prediction assumes that investors will actually feel pretty good coming out of this election.
00:17:34 · Ed Elson, Tom Lee
[00:17:34] S4: Just before we wrap here, midterm results will be in when this airs. You mentioned that there might be concerns that if we have a democratic sweep, then that would... Might mean a wave of anti AI or anti data center legislation. Talk a little bit more about that, but also what are your expectations for after the midterms? Because your prediction assumes that investors will actually feel pretty good coming out of this election. [00:18:01] S5: I'm gonna lean on that prediction markets and the polls show a democratic sweep. So let's let's say that that is the outcome. That's actually very favorable for markets. In the instances where the Republicans lose and the Democrats take the Senate after midterm elections, we've actually seen some of the biggest stock market rallies. For instance, in 1954, the S and P rallied 13% into the end of the year and 33% over the next twelve months. But a 100% of the time, markets have rallied after midterms over the next twelve months. So I think markets are gonna be in relief mode. The reason I think Democrats will support data centers subsequently is, one, that the big tech companies are gonna court Democratic senators and house and governors to really make data centers good for a community and for the state economics. And I think they're gonna shift into supporting that outcome. So I think AI will grow, but it's because the tech industry basically is courting the Democratic Party, which probably we should all properly expect to be taking over the Senate and the House.
00:19:19 · Ed Elson
[00:19:19] S4: Tom Lee is cofounder, managing partner, and head of research at Fundstrat Global Advisors. Tom, we appreciate your time. After the break, Apple earnings disappoint. And for even more markets insights, you can subscribe to my weekly newsletter, simply put, at edward elson dot substack dot com. Support for the show comes from Vanta. When you run security for a company that's scaling fast, the stakes just keep climbing. More compliance frameworks, more vendors, more risk, and a board that wants to see it all in one place. But in actuality, your compliance data is all over the place. Controls in one tool, vendor risk in another, and customer commitments buried in contracts. Your team has to spend more time stitching it together and less time running the program. And every quarter, you're basing decisions on last quarter's data. That's why Vanta connects it all. Its market leading agentic trust platform is built for enterprise scale. With more than 400 integrations and continuous monitoring, Vanta automates evidence collection, surfaces the risks that matter, and organizes your audit around your auditor's requirements. The numbers back it up. Vanta delivers a 526% ROI over three years and pays for itself in three months. And it's trusted by more than 16,000 companies, including Snowflake, Atlassian, and Ramp. Learn more at vanta.com/markets. That's spelled vanta.com/markets.
00:21:03 · S6
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