Tom Lee: Mark My words: "The AI Panic Is a Trap" - Smart Money Is Buying These 3 Stocks NOW

The AI trade remains the still the most important story and people of course are having longevity doubts, but you know, if someone goes back to '94 to 2000, there were many times when the internet story and even stocks like Cisco uh came under question whether there was durability and I think we're in that questioning it's durability at this moment. Uh but I think it's still in very good shape and I think the second big story out there is that margin debt is still needs to work off that high level of growth, just like what happened in Korea which had a sort of a margin call and I think that's why stocks are stalling here, but to me I think AI still works strongly through here. >> While mainstream media headlines scream panic and short-sighted skeptics declare the death of the AI trade, disciplined institutional investors are spotting the structural setup of a lifetime. The recent market volatility has triggered widespread noise, but Wall Street heavyweight Tom Lee, co-founder of Fundstrat and former chief equity strategist at JP Morgan, sees directly through the chaos. Known for calling major market bottoms when consensus bet heavily on recession, Lee's data-driven approach relies on evaluating core fundamentals over emotional sentiment. Lee explicitly dismisses today's AI fatigue by comparing current market skepticism to the early days of the internet expansion between 1994 and 2000, >> [music] >> when generational market leaders like Cisco faced intense durability doubts. Addressing warnings that hyperscaler spending cuts could crash equities, Lee notes that widespread anxiety is actually a classic contrarian indicator that the market has not peaked. Crucially, big tech hyperscalers, backed by immense free cash flow and pristine bond market access, have zero incentive to pull back capital expenditure. To To this massive mispricing, smart money is looking past broad mega caps to capitalize on three critical pure play AI enablers that are now trading at dirt cheap valuations, presenting a prime buy the dip opportunity before the next parabolic leg up. Let's begin with a pure play powerhouse trading under the ticker ALAB, Astera Labs Inc. While market attention hyper fixates on who sells the fastest GPU, the true bottleneck in artificial intelligence infrastructure isn't just raw compute power, it's connectivity. Every new generation of AI hardware demands exponentially greater bandwidth and lower latency, making high-speed signal integrity an absolute necessity. That is precisely where Astera Labs thrives, establishing itself not merely as a semiconductor hardware manufacturer, but as an essential connectivity [music] platform engineered to solve complex data flow bottlenecks in massive computing clusters. The fundamental momentum here is undeniable. In its recent operational performance, Astera Labs generated a massive $308.4 million in first quarter revenue, representing a staggering 93% year-over-year expansion. GAAP gross margin surged to an industry-leading 76.3% outpacing heavyweight competitors across the chip sector. Management followed up this blowout performance by reaffirming a robust second quarter revenue target of $355 to $365 projecting 15 to 18% sequential growth. Crucially, next generation PCIe Gen 6 products already account for more than 1/3 of total sales, demonstrating that hyperscalers are rapidly adopting their highest margin technologies. Beyond its dominant Aries PCIe smart retimers, Astera is rapidly expanding its addressable market into memory connectivity and rack-scale infrastructure through its Scorpio smart fabric switch portfolio. Deep integration within major AI ecosystems creates exceptionally high switching costs >> [music] >> and locks in multi-year customer relationships. Add in recent inclusion into the prestigious NASDAQ 100 index and Wall Street has taken notice reflecting 18 buy ratings and zero sell ratings alongside consensus expectations for 82% top-line ex pansion this year. As global data center spending ramps towards multi-trillion dollar projections by 2030, Astera Labs represents a premier infrastructure enabler positioned directly in front of the next structural leg up. Moving smoothly to our second conviction pick, let's look at ticker NBIS, Nebia Group NV. While surface-level skeptics dismiss Nebia as a mere GPU landlord vulnerable to chip depreciation, Wall Street is beginning to realize this company is building something far more lucrative. A full-stack AI native software and cloud ecosystem. Nebia isn't just renting out raw hardware, it owns the proprietary software stack, developer tooling, and inference layers running on top of those GPUs. This crucial shift into higher margin software solutions transforms its fundamental economics paving the way for a massive valuation re-rating. The financial results reflect a business firing on all cylinders. In the first quarter, Nebia delivered 390 million dollars in AI cloud revenue representing a jaw-dropping 840% year-over-year surge. Even more impressive, the AI cloud division's adjusted EBITDA margin expanded to 45% proving that this is a software-driven growth model with incredible operating leverage. Concerns over customer concentration are completely inverted when you look at the quality of its backlog. Multi-billion dollar commitments from tech titans like Meta and Microsoft serve as an investment-grade backstop, eliminating demand risk and enabling Nebius to easily fund its 20 to 25 billion-dollar capital expenditure program through asset-backed debt and strategic investments, including a key 9.3% equity stake from Nvidia. What solidifies Nebius as an infrastructure powerhouse is its command over the scarcest asset in artificial intelligence power. By locking up 4 gigawatts of contracted capacity and developing megascale sites like its proprietary 1.2 gigawatt Pennsylvania campus, Nebius has created an unassailable structural moat while grid queues stretch out for years. Management is targeting an annualized recurring revenue rate between 7 and 9 billion dollars by the end of 2026, backed by positive operating cash flows of 2.3 billion dollars and 9.3 billion dollars in quarter-end cash. As the market pivots from counting physical chips to valuing full-stack cloud software, Nebius stands out as a prime beneficiary of the AI buildout. Finally, rounding out our trio with ticker CRDO, we have high-speed connectivity leader Credo Technology Group Holding Limited. While the market has traditionally known Credo for its pioneer role in active electrical cables, or AECs, the company is undergoing a massive structural transformation. Credo is rapidly evolving beyond copper into a fully integrated optical connectivity platform, positioning itself to capture data center networking demand across racks, campuses, and ultra-dense AI clusters. The operational numbers demonstrate the sheer speed of this expansion. Credo reported record quarterly revenues of 437 million dollars, a 157% surge compared to the prior year, accompanied by pristine 68.3% non-GAAP gross margins and $177.5 million in free cash flow. Management followed this up with stellar guidance for the upcoming quarter between $465 and $475 million. Forecasting an 80% plus top-line expansion for fiscal 2027. Crucially, optical products are projected to account for over half of this growth. Generating more than $600 million annually across optical DSPs, silicon photonics, and zero flap optics. A major catalyst driving this transition is the recent acquisition of DustPhotonics. By bringing silicon photonics, optical DSPs, proprietary SerDes technology, and networking software under one roof, Credo has established an end-to-end optical stack that delivers unmatched power efficiency and lower latency for hyperscale operators. Furthermore, expanding relationships across emerging cloud giants like Meta and SpaceX linked opportunities diversify its customer base. While a recent sector pullback has created an attractive entry point, consensus long-term estimates project revenues expanding to $6.78 billion >> [music] >> by fiscal 2031, rapidly compressing forward valuation multiples. Credo represents a quintessential pure-play AI enabler ready for its next major move higher. These three infrastructure enablers represent the absolute backbone of the ongoing artificial intelligence revolution. As fear and short-term volatility temporarily discount these high-quality names, smart capital is positioning for the long haul. Make sure to like, subscribe, and drop a comment below with your favorite AI infrastructure pick before the next major leg up.