Tech stocks’ market leadership may be over and investors aren’t ‘bullish enough about the reopening’, says Fundstrat’s Tom Lee

Tom Lee
Thomas Lee Managing Director and Head of Research at Fundstrat

  • Fundstrat’s Tom Lee says tech stock’s market leadership is fading as energy, financials, and cyclicals takeover.
  • The Head of Research at Fundstrat argued investors aren’t “bullish enough about the reopening.”
  • Lee sees the reopening of the US economy post-pandemic as akin to a “post-war reconstruction period with government stimulus.”
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Tech stocks’ market leadership may be fading and investors aren’t “bullish enough about the reopening,” according to Fundstrat’s Tom Lee.

Lee made an appearance on CNBC’s “Fast Money” on Wednesday. In the interview, he said he sees tech stocks’ market leadership fading as the post-pandemic reopening gets underway.

“I think tech’s leadership, which was so astounding for the past decade, I think we’re seeing a new leadership emerge,” Lee said.

The managing partner and head of research at Fundstrat Global Advisors argued energy, financials, and cyclicals are leading the way now. And according to Lee, that means “a vigorous economic recovery is underway.”

Lee argued that the leadership of cyclicals will hurt tech and growth focused stocks going forward as well.

“These cyclicals could turn into growth stocks which means traditional growth stocks aren’t as shiny and interesting,” he said.

Lee also expects a faster reopening than other observers, arguing “people aren’t bullish enough about the reopening,” although he noted that “nobody can say COVID has been vanquished.”

Lee said although his reopening bullishness might be looked at as a “contrarian view” he sees the current era as a type of “post-war reconstruction period with government stimulus.”

He added that is “extremely boomy for real investment spending which is the biggest multiplier to GDP.”

Lee isn’t alone in the crowded reopening trade, but his somewhat bearish view on tech stocks is a shift from the norm. Lee has been a fan of tech stocks, and in particular Big Tech, for some time.

The head of research at Fundstrat even called big tech companies “unkillable businesses” in an interview in June of last year. For now though, Lee recommends avoiding the names.

His view isn’t shared by all, though. 

Analyst Dan Ives from Wedbush Securities said in a note to clients on Wednesday that he believes “tech stocks have another 25%+ upward move in the cards over the coming year led by FAANG, cloud, and cybersecurity names despite this risk-off moment on the Street.”

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DoorDash and Airbnb are not the future of tech leadership, says venture capitalist Gene Munster. He breaks down 3 under-appreciated tech stocks that have greater potential.

NYSE traders
  • Venture capitalist Gene Munster told CNBC on Friday that while Airbnb and DoorDash are “phenomenal,” there’s more potential for upside in underappreciated tech names including Zillow, Carvana, and Take Two Interactive.
  • The Loup Ventures co-founder and veteran tech analyst said he owns Zillows personally and with a valuation of just a third of Airbnb’s, it has potential to be “massive.”
  • Munster also said that he likes online used-vehicle sales platform Carvana. That stock is up over 180% year-to-date and trades at roughly $261 a share.
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Venture capitalist Gene Munster told CNBC on Friday that while recent IPO’s like Airbnb and DoorDash are “phenomenal,” he sees a different class of tech stocks taking leadership in the future.

“This recent IPO class is phenomenal, they are disruptors,” Munster said of Airbnb and DoorDash. But he added that a lot is priced into their valuations already, and the best stock performance is going to come from underappreciated tech stocks like Zillow, Carvana, and Take-Two Interactive.

The Loup Ventures co-founder and veteran tech analyst said he owns Zillow personally and that it will be “massive.” The online real estate company is currently valued at a $29 billion market capitalization, just one third of Airbnb, Munster added. 

“They’re gonna take what they do so well about capturing the users on a monthly basis, checking out real estate, renting, buying and add other products to that,” he said on Zillow. 

Read more:Who’s going to catch them?’: A Tesla analyst who once covered Intel breaks down the similarities he sees in the 2 disruptive companies – and shares why the stock has the potential to soar another 30%

Zillow is up roughly 170% year-to-date and is currently trading around $124 a share.

Munster also said that he likes online used-vehicle sales platform Carvana. That stock is up over 180% year-to-date and trades at roughly $261 a share. 

Video game company Take Two Interactive was another one of Munster’s picks. The stock is trading at $190 a share and is up 55% year-to-date.

When CNBC’s Joe Kernan asked Munster if he would put the same faith he has in tech giants like Amazon, Facebook, and Google, into DoorDash and Airbnb, Munster said: “No, I wouldn’t.” 

Read the original article on Business Insider