Renowned analyst Tom Lee sees Monday’s market decline as a buying opportunity, driven by the sell-off in AI and cryptocurrency-related stocks.
On Monday, NVIDIA experienced the largest single-day market cap loss in history, eroding $465 billion in market value.
NVIDIA is a US-based technology company founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem.
The company specializes in designing graphics processing units (GPUs) for gaming, professional visualization, and artificial intelligence applications.
NVIDIA's GPUs are widely used in data centers, cloud computing, and autonomous vehicles.
The company has also developed the CUDA parallel computing platform and the 'Deep Learning Institute' to support AI research and development.
Tom Lee’s Analysis
According to Tom Lee, head of Fundstrat Research, the significant price drop was an overreaction. On CNBC, ‘Lee stated that the double-digit drawdown in NVIDIA is the biggest opportunity since the COVID-19 outbreak and will prove to be a great buying moment.’
Tom Lee is a renowned American economist and Wall Street strategist.
He is the co-founder of Fundstrat Global Advisors, a financial research firm.
Lee gained popularity for his bullish predictions on 'Bitcoin' and cryptocurrency prices.
In 2018, he famously predicted that 'Bitcoin' would reach $100,000 by the end of 2020.
Lee's insights are widely followed in the cryptocurrency market, and he has been featured in various media outlets, including CNBC and Bloomberg.
He is also a frequent speaker at industry conferences.
‘Markets don’t like uncertainty,’ Lee said. ‘To me, it’s an overreaction, and this overreaction will be a great opportunity for investors.’
Market uncertainty refers to a state of ambiguity and unpredictability in financial markets.
It can be caused by various factors, including economic downturns, political instability, or unexpected events.
During periods of market uncertainty, investors often experience increased volatility, making it challenging to make informed decisions.
According to a study by the International Monetary Fund (IMF), market uncertainty can lead to a 10% decline in stock prices and a 5% decrease in GDP growth.
To mitigate this risk, investors may consider diversifying their portfolios or seeking advice from financial experts.
Lee’s prediction seems to be playing out well so far. After Nasdaq sold off 3% and NVIDIA (NVDA) dropped 17%, Nasdaq futures are up 1%, while NVDA is 5% higher in pre-market trading.
Market Health and Bitcoin Performance
The U.S. markets appear healthy, with ‘bitcoin outperforming small caps and financials year-to-date.’ Bitcoin itself saw a significant drop on Monday, falling as low as $97,500 before rebounding above $103,000. However, the level of $105,000 will likely be a target for bulls in the short term.
AI-related stocks also experienced massive drawdowns, with some miners seeing losses of up to 30%. Core Scientific (CORZ), one such miner, is now slightly higher in pre-market trading.
Fed Meeting and Market Expectations
The upcoming Federal Reserve policy meeting on Wednesday is expected to result in a pause in the federal funds rate. However, Lee notes that there is some uncertainty surrounding the meeting due to markets being too hawkish and placing too much emphasis on a potential rate hike in 2025.
With the market presenting a buying opportunity, investors may want to consider taking advantage of the current situation.
