Fundstrat co-founder Tom Lee said the recent selloff in AI-related stocks has bottomed, citing continued tightness in the AI market and the crypto market's response to a major exploit.
In an interview with CNBC's Squawk Box, Lee said demand for AI infrastructure remains high and argued the market is not suffering from overcapacity. He said constraints are limiting spending, with political opposition also slowing growth, but he described those factors as a brake on growth rather than a market top.
Two signals cited
Lee pointed to the AI market's supply tightness as the first reason for his view. He said the constraint is preventing more spending, which slows growth but does not create a top.
The second signal, according to Lee, was crypto's reaction to the hack of Binance. He said the $6.3 billion loss barely caused crypto prices to decline. If crypto is a leading indicator for risk, Lee said, the muted reaction suggests investors have already been washed out.
Year-end outlook
Lee maintained his forecast that the S&P 500 will end the year above 8,200. He acknowledged investor concerns over AI spending, oil prices, midterm elections and the Iran war conflict, saying markets have been struggling.
He also said he expects markets to exit the year strong, adding that markets climb a wall of worry.
