Dan Ives Says Tech Stocks Are in a '1997 Moment' as Tom Lee Predicts: ‘Probability of a Massive Rally’ Ahead

Yorkville Ives founder Dan Ives and Fundstrat‘s Tom Lee predict a massive rally in the stock market, despite high pessimism and the possibility of a further Federal Reserve rate hike. In episode 260 of The Compound and Friends podcast, published on Friday, Dan Ives likened the current market scenario to the 1997 moment, not the 1999-2000 one, indicating growth potential. In May, Ives used the same analogy and elaborated that the current AI boom resembles 1996 more than the excesses of 1999, arguing that rising tech spending is still in its early stages with Microsoft Corp. (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), and Amazon.com Inc. (NASDAQ:AMZN) He believes investors are underestimating the scale of upcoming AI investment, with an estimated $3 trillion in spending over the next three years and more than $550 billion in capex already underway. Meanwhile, Tom Lee expressed that while no one welcomes a Fed tightening, the current situation could set up a bullish moment. He noted that even with high pessimism, robust earnings could trigger a massive rally. Lee also pointed out that people often overlook the fact that companies have adapted to various crises by utilizing technology and cutting costs. This year, earnings have increased by 25%, while the market has only risen by 10%, making the market cheaper, he added. He emphasized that investors are entrusting their money to CEOs who have proven their worth by constantly adapting and cutting costs, even in crisis mode. “I think the probability of a massive rally starting tomorrow is really high,” Lee said. Read Also: Goldman Sachs Strategist Sees AI Boom Outpacing Bonds as Higher Rates Raise Market Risks: 'Long compute…Long Neoclouds…Long Data Centers' Market Outlook Turns Cautious These predictions come amid mixed market sentiment. Universa Investments founder Mark Spitznagel had earlier stated that the S&P 500 will "easily" top 8,000 in one final euphoric rally before plunging 80%. Spitznagel attributes the bubble to years of near-zero interest rates and expects higher borrowing costs to eventually trigger a downturn. He predicts the Fed will respond with renewed quantitative easing, causing its balance sheet to expand sharply and potentially reigniting inflation. Furthermore, Ed Yardeni, President of Yardeni Research, revised his year-end S&P 500 target downwards, cautioning investors to be wary in the face of increasing rates. He also slashed his S&P 500 year-end target from 8,400 to 7,900. Price Action: Year-to-date, the SPDR S&P 500 ETF Trust (ARCA: SPY) and Invesco QQQ Trust ETF (NASDAQ: QQQ) have surged 13.58% and about 21%, respectively, as per Benzinga Pro. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Read Also: Jamie Dimon Says AI Spending Could Hit $1 Trillion in 2027 But JPMorgan CEO Warns it Could Add 'Little Bit' to Inflation: 'That’s Like 1% Increase to GDP…' Image via Shutterstock