In an interview with CNBC, Lee called the setup in AI stocks a potential “coiled spring.”
- Lee said AI-related businesses remain a key source of S&P 500 earnings growth.
- Nvidia, Nebius and CoreWeave shares rebounded on Monday morning, while Goldman Sachs upgraded CoreWeave to ‘Buy’ from ‘Neutral’.
- Intel and Datadog gained following analyst upgrades, with JPMorgan raising Intel to ‘Neutral’ and Bernstein upgrading Datadog to ‘Outperform.’
Bitmine Immersion Technologies (BMNR) chairman Tom Lee said on Monday that he sees opportunity in the recent pullback in artificial intelligence stocks, adding that investor concerns and the unwinding of crowded positions could create an attractive entry point in some of the market’s biggest growth drivers.
“We’re at a time of great concern,” Lee said in an interview with CNBC, pointing to escalating geopolitical tensions, including two wars that he said were getting worse, alongside concerns about funding for the AI buildout.
While those risks have added to investor caution, Lee believes the resulting pullback could also create “opportunities” in stocks that have come under pressure, particularly AI stocks.
“I think as much as people are sort of fearful of this, I’d be sort of jumping into the AI, semiconductor, Mag Seven, software. These are AI downstream names.”
– Tom Lee, Chairman, Bitmine Immersion Technologies
His comments came amid a rebound in AI stocks on Monday morning, following a sharp sell-off last week. Nvidia (NVDA), the AI bellwether, edged 0.5% higher in morning trade. On Stocktwits, retail sentiment around the Jensen Huang-led firm trended in ‘neutral’ territory.
Meanwhile, Nebius (NBIS) and CoreWeave (CRWV) were among the top-trending tickers on Stocktwits at the time of writing, with NBIS stock up nearly 4% and CRWV stock gaining around 3%.
CoreWeave on Monday also received an upgrade from Goldman Sachs to ‘Buy’ from ‘Neutral,’ but the firm lowered its price target to $106 from $139. On Stocktwits, retail sentiment around CRWV trended in ‘extremely bullish’ territory over the past day.
Tom Lee Sees A ‘Coiled Spring’ In AI Stocks
Lee called the setup in AI stocks a potential “coiled spring” opportunity, with negative sentiment and reduced positioning creating room for a rebound if the underlying growth story remains intact.
“Reports from the brokerages that AI positioning by hedge funds has been almost entirely unwound,” Lee said. “I think that number one explains a lot of the selling pressure, but I also think that’s where the opportunity lies.”
Several chip and software stocks rebounded on Monday. SanDisk (SNDK), Western Digital (WDC), Intel (INTC) and Datadog (DDOG) were among the S&P 500’s top gainers at the time of writing. SNDK stock gained nearly 8%, while WDC shares climbed over 5%.
Analyst calls added to the activity. JPMorgan upgraded Intel to ‘Neutral’ from ‘Underweight’, keeping its $85 price target unchanged. The firm said the risk/reward had become more balanced with the stock approaching its target. INTC stock rose around 4.7% in morning trade. However, on Stocktwits, retail sentiment around the shares remained in ‘bearish’ territory over the past day.
Meanwhile, Bernstein upgraded Datadog to ‘Outperform’ from ‘Market Perform’ and raised its price target to $350 from $237. The firm cited data suggesting that enterprise token consumption among the largest AI labs had grown at least 50% quarter over quarter. DDOG stock climbed around 4.1% in morning trade, with retail sentiment trending in the ‘neutral’ zone.
AI Earnings Remain Central To Lee’s Bullish Case
Lee’s broader argument was that AI-related businesses remain a key source of growth for S&P 500 earnings, even as investors question the valuations and capital spending required to build out AI infrastructure.
“The growth, the visible growth, the source of drivers of S&P earnings, it’s really coming from the AI trade and all the bottlenecks,” Lee said. He added that valuations in these areas remain “quite reasonable.”
Investors have become increasingly concerned about the scale of spending needed to build AI infrastructure, including how companies will finance new data centers and whether the resulting returns will justify the investment. Those questions have weighed on companies exposed to the AI buildout, particularly those reliant on debt financing.
Memory and storage stocks have been among the hardest-hit areas of the market this month. The Roundhill Memory ETF (DRAM) has declined 25.1%, while the VanEck Semiconductor ETF (SMH), which tracks a broader basket of chip stocks, has fallen 12.6%.
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