Fundstrat’s Tom Lee remains bullish on tech despite Nvidia CEO departure

“We are sticking with the thesis that Technology stocks bottomed last week,” Lee stated in a research note released Thursday. He emphasized that Huang’s departure does not alter his outlook. The technology sector has experienced significant pressure recently due to concerns about the long-term viability of the artificial intelligence boom and rising interest rates. An anticipated Democratic majority in the incoming Congress is also expected to increase oversight of AI development within the United States. These factors have contributed to a decline in the Nasdaq-100 index, which is currently 9.5% below a record high reached in October and down over 7% in the past month.

Lee suggests that the intense selling pressure witnessed last week may be nearing its end. He pointed to the recent struggles of several prominent hedge funds as evidence of a market “internal bottom.” According to Lee, this indicates a period of substantial selling and forced liquidations. He characterized last week’s drop as a “black swan” event, as hedge funds typically maintain a neutral beta and shouldn’t experience such sharp declines when technology stocks fall.

Lee further explained that historical market patterns demonstrate that downturns often occur alongside negative news. “More importantly, history shows markets bottom on bad news. That means, we don’t want to see stocks fall and then there is a ‘piece of good news,’” he said.

While a substantial rebound appears unlikely for Thursday, Nvidia shares were down 10%, impacting broader U.S. stock market benchmarks. Competitors AMD and Broadcom bucked the trend, rising 2% and 5%, respectively. If Lee’s assessment of a market bottom proves accurate, now may be a strategic time to increase investment in the technology sector.