Fundstrat’s Tom Lee returned to CNBC’s Morning Call Sheet on Thursday, July 9, alongside JonesTrading’s Mike O’Rourke and Vital Knowledge’s Adam Crisafulli, to discuss a market that is simultaneously celebrating the AI build-out while rotating into value and defensive names.
Lee argued: “AI is probably one of the most important structural stories in our lifetime.” He paired that with a second observation that inflation could ease in the back half of 2026: “I think inflation pressures are actually easing. And I think there’s a lot of companies and groups that are going to benefit from that.” The disinflation backdrop supports his thesis. Core PCE was 3.41% year over year in May 2026, and WTI crude has dropped to $72.08 per barrel, down roughly 9.96% over the past month from an April spike to $114.58.
NVIDIA: Why the AI Infrastructure Boom Is Far From Over
NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) remains the clearest embodiment of Lee’s structural call. Q1 FY2027 revenue reached $81.615 billion, up 85.23% year over year, with Data Center at $75.246 billion and networking growing 199%. CEO Jensen Huang described “the buildout of AI factories, the largest infrastructure expansion in human history” in the company’s SEC filing. Supply-related commitments now sit at $119.0 billion.
Despite these developments, shares are up only 9.58% year to date, a valuation compression that supports O’Rourke’s thesis: “The hyperscalers, their business models are changing. They’re becoming 21st-century industrial companies that may warrant lower multiples.”
Microsoft: Compressing Multiple, Expanding AI Business
Microsoft (NASDAQ:MSFT) illustrates the tension. Satya Nadella disclosed that “our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year,” and Azure grew 40%. Even so, the stock is down 20.38% year to date, with capex ballooning to $30.88 billion in the quarter.
For readers interested in how AI power demand and infrastructure could create new opportunities, our team’s Free Report: 7 Stocks Powering the AI Boom (That Aren’t Chipmakers) is worth reading.
SK Hynix’s IPO Could Pressure Micron
Micron (NASDAQ:MU) posted fiscal Q3 revenue of $41.46 billion, up 345.7%, with non-GAAP EPS of $25.11 and Q4 guidance of $50.0 billion ± $1.0 billion. CEO Sanjay Mehrotra tied the results to “the strategic value of memory in the AI era.” The stock is up 232.64% year-to-date and trades at a forward P/E near 6. The wildcard: SK Hynix, the world’s largest memory maker, begins U.S. trading tomorrow, and Reddit investors are debating whether capital will rotate from Micron to its newly listed peer.
Johnson & Johnson: The Value Rotation in Action
Johnson & Johnson (NYSE:JNJ) captures the defensive bid Lee flagged. Q1 2026 revenue rose 9.9% to $24.06 billion, the dividend was raised 3.1% to $1.34 per quarter, marking 64 consecutive years of growth, and FY2026 adjusted EPS guidance now sits at $11.45 to $11.65. Shares are up 28.69% year-to-date with a beta of just 0.235, exactly the disinflation beneficiary profile Lee described.
What to Watch
Lee’s argument is that both AI and defensive stocks can work if inflation continues to cool. AI remains the long-term structural growth story, but easing price pressures could allow sectors that have lagged during the AI rally to participate more meaningfully.
Q2 earnings will provide the first major test. Investors will be watching whether hyperscalers continue to support massive AI infrastructure spending while corporate results show improving breadth across the market. If both trends hold, the rally may become less dependent on a handful of AI leaders and more broadly supported across sectors.
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