A global labor shortage will send tech stocks soaring, with the sector poised to grow to 50% of the total stock market, Fundstrat says

• A global labor shortage of about 80 million workers will send technology stocks heading parabolic, according to Fundstrat's Tom Lee.

• The technology sector will eventually make up 50% of the S&P 500, Lee said Wednesday.

• “I believe AI is already addressing the global labor shortage of about 80 million workers by the end of 2030,” Lee said.

A global labor shortage of about 80 million workers by the end of 2030 will send technology stocks higher, according to Tom Lee of Fundstrat.

Lee said in a video on Wednesday that he expects the technology sector to grow to 50% of the S&P 500 from its current weight in the benchmark index of about 30%.

He made comments to me After Nvidia released its blockbuster first-quarter earnings report, Resulting in the stock rising 10% to record levels. However, according to Lee, it is still early in the AI ​​story as it will help boost productivity and address the looming labor shortage.

“The prime-age labor force is growing more slowly than the total world population, and by the end of the decade that gap is about 80 million workers. So unless there is a productivity boom, which AI will do, it will create a lot of pressure.” “Companies have to or provide incentives for them to innovate, and that means we will see a shift from spending on annual wages to spending on silicon,” Lee said.

Lee estimates that companies will spend approximately $3.2 trillion annually on AI technology to address the growing labor shortage.

Nvidia, which has annual revenue approaching $100 billion, will benefit greatly from this spending, Lee said.

This is not the first time a global labor shortage has led to a parabolic rise in technology stocks as technology companies have helped boost productivity.

“Between 1948 and 1967, there was a global labor shortage and technology stocks went parabolic,” Lee said. “Between 1991 and 1999, there was a global labor shortage and technology stocks went parabolic, so that’s what’s happening today.”

As for whether Nvidia was in a dot-com-like bubble, when Cisco shares rose to record highs thanks to the promise of the Internet, Lee set the record straight.

“Keep in mind that Nvidia sells a $100,000 chip because it's so rare, no one really sells it. In contrast, Cisco sold a $100 router during the dot-com boom, yet the P/E was 100x. I think the P/E For Nvidia at 30x “It looks very attractive and that's why we think these are early days,” Lee said.

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