Summary
Highlights
Jeremy shares his top stock picks. Salesforce (CRM) is his number one, noting it's a newer position he expects to be a huge AI beneficiary. Adobe (ADBE) is number two, despite some negative sentiment, due to its strong financials and innovation. Amazon comes in at number three, already a significant holding, with continued growth expected in e-commerce, AWS, advertising, and AI Bedrock. Google is fourth, still a buy despite recent gains, with a favorable forward P/E and the Gemini opportunity. He also notes Meta and Meta Threads as strong buys if they weren't already large positions.
Nike is number five, with Jeremy hoping for a dip to add more shares before a potential rally in 2026. Cheesecake Factory (CAKE) is a consistent buy due to expansion opportunities with Flower Child and North Italia, regardless of economic conditions, as a weaker economy could lead to cheaper rents and construction. SoFi (SOFI) is number seven, recognized for its insane growth rates and long-term potential. Cava (CAVA) at number eight, is a stock he's watching for a potential entry in late 2024 or early 2025. Bath & Body Works (BBWI) is ninth, a low P/E, consistent business unaffected by low consumer sentiment. Whirlpool (WHR) is number ten, previously owned, on watch due to potential tariff changes and a housing rebound. Planet Fitness (PLNT) and RH (RH) are his 11th and 12th picks, with RH being more speculative and requiring a lower price point for consideration.
Tom Lee discusses the super cycle in AI, acknowledging potential shakeouts but also noting that current valuations are reasonable compared to the 1998 dot-com era. He highlights Nvidia's forward P/E of 26 being cheaper than Costco and Walmart, despite Nvidia's superior growth. Jeremy challenges Tom's comparison, arguing that Costco and Walmart's sales are stable, whereas Nvidia faces realistic concerns about chip cycles, potential revenue declines, and companies seeking more cost-effective solutions or developing their own custom chips. He suggests Nvidia's stock will remain 'rangebound' due to these uncertainties.
Jeremy predicts that the growth rates for AI applications like Chat GPT will slow substantially in 2026 and 2027. This potential slowdown could make investors less willing to pay premium valuations for companies like Nvidia. He also points out that Nvidia now faces serious competition from AMD, especially with AMD's new 350 and upcoming 400 series chips. This increased competition could lead to margin pressures for Nvidia, potentially impacting its earnings per share if revenue growth plateaus or declines. He emphasizes that the market is likely already factoring in these competitive pressures and the potential for slowing growth, explaining why Nvidia's stock hasn't been bid up further despite its current strong performance.