Source: Finance Association

Tom Lee, co-founder and head of research at the US investment agency Fundstrat Global Advisors, said a few days ago that by the end of 2030, the global labor gap will reach around 80 million, which will drive a “parabolic rise” in technology stocks.

He predicts that technology stocks are$S&P 500 Index (.SPX.US)$The weight of the middle will increase from around 30% to 50%.

He was one of the few bulls on Wall Street last year. At the end of 2022, he predicted that the S&P 500 index would soar by more than 20% to 4,750 points in 2023. As a result, the index surged unexpectedly last year, and the final price was only more than 30 points away from the target point it set. According to reports, Lee's prediction was the closest of the strategists tracked by Bloomberg.

Labor shortages boosted

Prior to Lee's comments above,$NVIDIA (NVDA.US)$A sensational first-quarter earnings report was released this week, which drove the company's stock price to soar nearly 10% to a record high. However, Lee believes the AI story is still in its early stages, as it will help increase productivity and address the impending labor shortage.

“The golden age workforce is growing at a slower rate than the world's total population. By the end of this decade, this gap will reach around 80 million. So, unless artificial intelligence brings about a boom in productivity, it will put a lot of pressure on companies. “This means a huge increase in annual wage spending, or an incentive for them to innovate,” he said.

Lee estimates that the company will spend around $3.2 trillion each year on artificial intelligence technology to address growing labor shortages. He specifically mentioned that Nvidia would benefit greatly from this expenditure.

He further explained that this is not the first time that global labor shortages have led to a parabolic rise in technology stocks as technology companies help increase productivity.

“Between 1948 and 1967, there was a global labor shortage, and technology stocks showed a parabolic trend. There was a global labor shortage between 1991 and 1999, and technology stocks also showed a parabolic trend, so this is the situation today.” he said.

Is Nvidia a bubble?

As for Nvidia, which is at the center of the AI boom, will it be like during the internet bubble$Cisco (CSCO.US)$Same, it eventually broke down. Lee gave a negative answer.

“Remember, Nvidia sells the $100,000 chip because it's scarce and no one else is actually selling it. In contrast, during the Internet boom, Cisco sold routers for $100, but its price-earnings ratio was 100 times higher. I think Nvidia's 30x price-earnings ratio looks quite attractive, which is why we think it's still in its infancy.” he said.

However, as Nvidia's stock price continued to soar, a “bubble theory” did emerge in the market. For example, legendary investor Rob Arnott (Rob Arnott), chairman of the investment agency Research Affiliates, said on Thursday that Nvidia's success in the market is based on the idea that it will continue to dominate the semiconductor industry in the future.

“It seems like there's a bubble. Market sales rates are astronomical, and the reason they are astronomical is because their profit margins are absolutely huge. Moreover,$Advanced Micro Devices (AMD.US)$,$Intel (INTC.US)$und$Taiwan Semiconductor (TSM.US)$Will you sit back and say, 'Oh, you can keep your profit margin above 50%. You can keep over 90% of the market share. Don't worry'? No, they all have to get involved.” he said.

editor/tolk