The head of research at a top investing firm says this one recent technological advance could send top banking institutions into a price frenzy.
In a new interview with CNBC, Fundstrat’s Tom Lee says the artificial intelligence (AI) boom can help JPMorgan and Goldman Sachs grow even more explosively.
“I think there’s a bigger upside in owning financials right now because financials are benefiting from AI. They’re second-order beneficiaries, and they’re also getting the green light to build on the blockchain, which could make JPMorgan and Goldman’s business models much more profitable and expand their multiples. So yes, I’m still bullish on AI, but I actually think financials are one of the main drivers for the next 12 to 24 months.”
When asked for his thoughts on how Federal Interest rates will affect bank stocks, Lee agrees that there is still a “real upside” for large-cap stocks.
“At the end of the day, when you look at gross domestic product (GDP), for every unit of economic activity, there’s one unit of financial activity. Financials represent half the economy, but they’re nowhere near half the index. I’m not saying they’ll reach that level, but they really should re-rate. I think even this quarter shows that.”
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