In an interview with CNBC, Lee said the AI market is “not an over-capacity market” and that constraints on spending are slowing growth, not marking a top.
- He said the correction has already played out across most of the market, with the equal weight index recovering.
- Lee also cited the muted crypto reaction to the Binance hack as a second sign that selling has run its course.
- On midterm elections, Lee said the markets may prefer a divided government because it can limit major policy changes.
Fundstart managing partner and Bitmine Immersion Technologies (BMNR) chairman Tom Lee said on Monday that he believes the market has reached its bottom after a rough stretch for stocks last month, citing a tight market for artificial intelligence and a muted crypto reaction to last week’s $6.3 billion Binance hack.
“I think we’re at the bottom,” Lee said in an interview with CNBC, pointing out that the pullback has already spread across much of the stock market and that demand for AI infrastructure remains strong.
Lee forecast that stocks will finish the year strongly even though the path has been difficult. He said investors are nervous about a range of issues, including the war, AI spending, debt markets, the Fed and inflation. “I do think markets are going to exit the year strong, but they have been struggling,” he said. “Markets climb a wall of worry.”
U.S. equities were rebounding in pre-market trade on Monday after last week’s massive sell-off. The SPDR S&P 500 ETF (SPY) was up 0.38%, the SPDR Dow Jones Industrial Average ETF (DIA) moved 0.36% higher, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) gained around 0.66%. Retail sentiment around SPY on Stocktwits shifted to ‘neutral’ from ‘bullish’ territory over the past day.
Bitcoin (BTC) was also on the rebound. Bitcoin’s price crossed $78,000 on Monday morning, up by 0.3% in the last 24 hours, after hitting a low of nearly $76,000 on Friday. Retail sentiment around the apex cryptocurrency remained in the ‘extremely bearish’ zone over the past day.
AI Market Is ‘Still Very Tight’
Lee said the AI market remains constrained by the ability to build and expand infrastructure, rather than a lack of demand. Political opposition and spending limits may slow growth, but he does not view those pressures as evidence that the AI investment cycle has peaked.
“I think we are at the bottom because number one, the market for AI is still very tight. It’s not an overcapacity market, and the constraint we’re seeing is preventing more spending, or political opposition preventing more spending,” he said. “That is slowing the growth, but it’s not creating a top,” he said.
Binance Hack Is ‘Barely’ Hurt Crypto Prices
Lee’s second sign pointing to the market bottom was the crypto market’s reaction to the Binance hack. Lee said crypto often leads moves in risk appetite, and that it has held up despite a $6.3 billion loss. “It’s barely caused a decline in crypto prices because if crypto is a leading indicator for risk, you’ve already seen people sort of washed out,” he said.
Lee said the muted reaction stood out against earlier hacks. He compared the Binance breach to the 2025 breach at exchange Bybit, which he attributed to North Korea. “Compared to 2025 when there was the Bybit hack by North Korea, which was 1/4 the size, crypto prices fell 20% quickly,” he said.
He said it was positive that Binance has the money to cover customer losses. He added that the size of the theft pointed to a weakness in how exchanges are run, not in the blockchain itself.
Lee Says Most Of The Market Has Already Corrected
Lee said the pullback that was expected in the stock market has largely happened already. “This correction that we thought would happen, you know, is already played out in the Nasdaq, and the equal weight is now climbing back to new highs,” he said.
Chips drove the year’s gains and then most of October’s losses. The month saw a 17% drop in semiconductor stocks, yet the S&P 500 is down less than 1% over the same period.
Midterms Impact On US Markets
Lee also noted that the markets may prefer a divided government because it can limit major policy changes. Even if Democrats win both chambers of Congress, President Donald Trump would retain his veto power, he noted.
“Markets, in some ways, prefer gridlock because then you don’t have too much policy creep,” Lee said.
One concern among investors is whether Democratic gains in the House and Senate could lead to greater resistance to data-center construction. Lee, however, expects Democratic lawmakers to continue supporting AI infrastructure because of its potential economic benefits for their districts.
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