Crypto and Semis Set Up for Buy as Stock Selloff Fades
Key Summary
Tom Lee of Fundstrat Global Advisors sees a buying opportunity in crypto and semiconductors after a recent stock selloff, citing technical support and intact fundamentals. In contrast, other experts point to higher interest rates and potential demand slowdowns. The market is still working out the cost of capital, with third-quarter earnings expected to provide answers in a couple of weeks.
Precedent & Market Context
The recent stock selloff has raised concerns about the market's sentiment and potential downturns. However, Tom Lee of Fundstrat Global Advisors sees a buying opportunity in crypto and semiconductors, citing technical support and intact fundamentals.
Main Event
Lee pointed to crypto, memory and semiconductor stocks, which have pulled back to technical support. The Cboe Volatility Index (VIX), Wall Street's fear gauge, rose sharply on the day. Meanwhile, rising oil prices raised worries that tensions could escalate over the weekend.
Analysis & Market Impact
Lee argued that the fundamentals and drivers of AI remain intact, despite AI debt markets lacking confidence. He pointed to the fact that all of the mentioned areas - crypto, memory, semiconductors, AI cloud providers and tech broadly - have pulled back to support levels, price zones where buyers have historically stepped in.
Implications & Outlook
In contrast, other experts point to higher interest rates and potential demand slowdowns. Dan Greenhaus of Solus Alternative Asset Management blamed higher interest rates for the trouble at AI cloud providers, while Ed Clissold of Ned Davis Research suggested that the market is still working out the cost of capital. Third-quarter earnings are expected to provide answers in a couple of weeks.
Tom Lee of Fundstrat Global Advisors sees a buying opportunity in crypto and semiconductors after a recent stock selloff. Higher interest rates and potential demand slowdowns are concerns for the broader market.
Tom Lee
Fundstrat Global Advisors, Dan Greenhaus, Ed Clissold, Solus Alternative Asset Management, Ned Davis Research
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