Fundstrat sees buying opportunity in tech sell-off as Nvidia turmoil pressures U.S. stocks
Technology shares remain under pressure as concerns over artificial intelligence spending, higher borrowing costs and political scrutiny weigh on sentiment. The latest shock comes from renewed turmoil at Nvidia, leaving the Nasdaq-100 well below its October intraday high and extending a broader pullback in the sector.
Highlights
- Fundstrat's Tom Lee identifies last week's intense tech sell-off and hedge fund collapses as signs of an internal bottom for the sector.
- Nvidia shares plunged 10% Thursday amid CEO Jensen Huang turmoil, raising doubts about AI sector growth and increased Congressional scrutiny.
- Nasdaq-100 is 9.5% below its October peak and down over 7% in a month, yet AMD and Broadcom rose 2% and 5%, signaling selective chip stock resilience.
Fundstrat maintains bullish call on tech
As reported by CNBC, Fundstrat head of research Tom Lee says the recent slide in technology stocks does not alter his view that the sector found a bottom last week.In a note on Thursday, Lee writes that selling pressure should ease after a sharp wave of declines and forced liquidations. He says the collapse of several high-profile hedge funds last week points to what he calls an “internal bottom,” meaning intense selling has already passed through the market.
Lee argues that markets often bottom on bad news rather than positive headlines. In his view, the severity of last week's sell-off resembles a black swan event, particularly because hedge funds that are typically beta neutral should not have suffered such steep losses simply from a decline in technology shares.
Nvidia turmoil adds to sector strain
Nvidia is at the center of the latest market weakness, with its shares down 10% on Thursday after fresh turmoil surrounding Chief Executive Jensen Huang. The drop adds to broader concerns about whether the AI expansion can be sustained as financing costs rise and a Democratic-controlled incoming Congress is expected to subject the buildout to closer scrutiny.The Nasdaq-100 stands 9.5% below the intraday record it set in October and is down more than 7% over the past month. Even so, some chip stocks are outperforming, with AMD up 2% and Broadcom rising 5%, suggesting investors are not pulling back uniformly across the semiconductor space.
Lee cautions that a major rebound does not appear likely immediately, but his stance implies the current weakness may offer a chance for investors to increase exposure to technology if the sector's floor is already in place.
As highlighted earlier, our Nasdaq 100 slide coverage noted the index breaking key moving averages as Treasury yields fell.
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