Tom Lee on Stock Sell-Off and Opportunities in the Cryptocurrency Market

Tom Lee, head of research at Fundstrat Global Advisors, believes that Friday's stock sell-off has created a buying opportunity in cryptocurrency and semiconductors. According to him, crypto, memory, and semiconductors have pulled back to technical support levels. The Cboe Volatility Index (VIX), Wall Street's fear gauge, surged sharply that day. Rising oil prices added to concerns that tensions could escalate over the weekend.

Speaking on CNBC's Closing Bell, Lee said that fears around AI intensified during the week. He acknowledged that the AI debt market might be lacking confidence but insists that the fundamental drivers of AI remain intact. Fundstrat's technical strategist Mark Newton, he noted, is expecting a rally with a bottom on Friday or Monday.

Lee included crypto in his buying recommendations along with memory, semiconductors, AI clouds, and tech in general—all of which, he said, have pulled back to support levels where buyers have historically stepped in. "I think the situation is conducive to buying memory, semiconductors, neoclouds, tech in general, and crypto. They have all pulled back to support levels at a time when people may have become too fearful of the fundamentals," Lee said.

In contrast, Dan Greenhaus, chief economist and strategist at Solus Alternative Asset Management, explains the issues with high rates—they are pressuring the speculative part of AI construction, including CoreWeave. Meanwhile, ASML and TSMC reported strong demand. Greenhaus cautions against interpreting the difficulties of AI clouds as an early signal for the entire market: "How many canaries in the coal mine have we already killed in the last 3 years?"

Ed Clissold, chief U.S. strategist at Ned Davis Research, reminded that capital has a cost, and the market is still determining it. A slowdown in construction is possible even with strong demand. Large companies bypassed the usual September weakness, while smaller ones showed it; Friday's drop, in his opinion, might partially reflect this "catch-up" dynamic. Reports for the third quarter will provide answers in a couple of weeks: last quarter, a 25% profit for the S&P 500 was expected, but it came in at 32%; this time, 25–26% is expected. Participants in the discussion generally considered demand resolved and debated financing—the cost of capital has become a central theme in AI construction.