Lee argued that the Fed’s policy announcement itself could remove a layer of uncertainty that has weighed on markets in recent weeks.
- Lee described the current central bank as a “new Fed” under Chair Kevin Warsh that has provided investors with less visibility ahead of policy decisions, making Wednesday’s meeting a potentially important catalyst.
- He argued that Micron’s recent pullback has left the stock trading at a meaningful discount to its historical valuation, indicating that much of the market’s concern is already reflected in the share price.
- Lee said the Fed decision itself could reduce uncertainty, potentially supporting stocks after the announcement, especially as some investors brace for a surprise rate hike.
Fundstrat Managing Partner Tom Lee believes beaten-down AI infrastructure stocks such as Micron Technology Inc. (MU) could find their footing after Wednesday’s Federal Reserve policy decision, arguing that investor pessimism has become excessive ahead of the closely watched meeting.
In a series of posts on X, Lee said “a lot of fear is baked into the prices” of AI “bottleneck” stocks, pointing to a decline of about 40% in Micron’s shares from the 52-week high of $1,255 that it hit on June 25, 2026.
Lee argued that Micron’s recent pullback has left the stock trading at a meaningful discount to its historical valuation, indicating that much of the market’s concern is already reflected in the share price.
Micron shares were down more than 6% in Wednesday’s midday trade. The stock has fallen over 33% over the past month.
Lee Explains Why The Fed Decision Could Help
Lee argued that the Fed’s policy announcement itself could remove a layer of uncertainty that has weighed on markets in recent weeks.
He described the current central bank as a “new Fed” under Chair Kevin Warsh that has provided investors with less visibility ahead of policy decisions, making Wednesday’s meeting a potentially important catalyst.
“Keep in mind, when markets lack visibility, the ‘event’ itself restores visibility,” Lee wrote, adding that stocks could trade better after the decision, particularly with some firms having called for a surprise rate hike.
The Fed is widely expected to keep interest rates unchanged on Wednesday, but sticky inflation, tariffs, geopolitical tensions and evolving signals from Chair Kevin Warsh have clouded the policy outlook.
Data from the CME FedWatch tool shows that the odds of rates remaining unchanged on Wednesday are at 66.3%, edging lower from 69% on Tuesday.
Investors Will Be Reading The ‘Tea Leaves,’ Say Economists
Economists at Schwab Center for Financial Research stated in a note on Wednesday that investors will focus on Warsh’s messaging for clues on the Fed’s monetary policy direction going forward.
“Either way, investors will be listening closely to Fed Chair Kevin Warsh’s press conference and reading the tea leaves of the policy statement to find clues about the policy path ahead,” the economists said.
At its June meeting, the Fed struck a hawkish tone, emphasizing its commitment to price stability while offering less forward guidance than in previous statements. Half of policymakers also penciled in at least one additional rate hike this year in the quarterly “dot plot,” reflecting concerns that inflation could remain stubborn.
Economists at ING expect the Fed to leave interest rates unchanged despite its increasingly hawkish stance, though they noted that markets continue to price in roughly a 30% probability of a surprise rate hike. They said either outcome could trigger a sharp move in interest rates, with investors focusing as much on Warsh’s messaging as on the policy decision itself.
ING added that a surprise rate hike could weigh on risk assets by tightening financial conditions. In that scenario, shorter-term Treasury yields would likely move higher, while longer-dated yields could face resistance as investors reassess the global growth outlook, resulting in a flatter yield curve.
MU stock is up 170% year-to-date and 579% over the past 12 months. The iShares Semiconductor ETF (SOXX) is up 91% over the past 12 months, while the Direxion Daily Semiconductor Bull 3X Shares (SOXL) is up 254%.
The Invesco QQQ Trust (QQQ) is up 18% during this period, while the Global X Artificial Intelligence & Technology ETF (AIQ) is up 26%.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<