Episode summary
Fundamental AI story and drivers are still intact, says Fundstrat's Tom Lee
CNBC Closing Bell
· · 6 min · Guests: Dan Greenhaus, Tom Lee, Ed Clissold
Summary
Tom Lee argued that the selloff reflects a familiar “climbing a wall of worry” pattern rather than a break in the AI trade. He said AI fears intensified this week, but the fundamental story and the drivers of AI remain intact, which makes the pullback look like a potential buying opportunity rather than the start of a broader downturn. He pointed to support levels in semis, memory, neoclouds, tech broadly and crypto.
Dan Greenhaus said the market may be overreacting to the latest signs of stress in the AI buildout, especially because investors have repeatedly treated each new warning sign as a cycle-ending event only to be proven wrong. He said higher rates are pressuring the riskier parts of the capital stack first, with unsecured debt in the neocloud space getting hit before safer financing.
Both guests said the real issue is becoming capital, not just demand. Greenhaus argued that the broader demand backdrop remains robust, citing recent commentary from ASML and TSMC, but that higher borrowing costs could slow the pace of investment. The host noted that the next earnings season will be crucial to see whether strong demand and earnings beats can keep the buildout on track.
Key takeaways
- Tom Lee said the recent weakness looks like a risk/reward setup, not a signal that the AI trade has broken down.
- Tom Lee sees support in semis, memory, neoclouds, broad tech and crypto after the pullback.
- Dan Greenhaus said higher rates are hitting the riskier parts of the AI buildout first, especially unsecured debt.
- Greenhaus said demand still looks robust, but capital availability and financing costs are becoming a bigger constraint.
- The host said the next earnings season will be key because recent beats have repeatedly rescued the AI trade.
Notable quotes
“THE FUNDAMENTAL STORY AND THE AND THE DRIVERS OF AI ARE INTACT”
“I THINK THE SETUP IS FOR A BUY ON THE MEMORY, THE SEMIS, YOU KNOW, THE THE THE NEO CLOUDS, YOU KNOW, TECH BROADLY CRYPTO”
“HOW MANY CANARIES HAVE WE KILLED IN THE COAL MINE OVER THE LAST THREE YEARS”
“THE BROADER DEMAND ENVIRONMENT REMAINS PRETTY ROBUST”
“CAPITAL IS KIND OF MOVING UP THE CHAIN OF PRIORITY OF THINGS THAT ARE BECOMING MORE OF A THWARTING TO THIS”
How the episode opens
Renewed questions about pricing power and whether this new rival from china could dramatically change the landscape less. — Yeah, so many headlines this week. Seema. We appreciate it. Let's bring in cnbc contributor fundstrat's Tom Lee. So this is dan greenhouse and Ed Clissold of Ned Davis Research. Thank you all for being here. So tom, let's start with you. You know, the market today kind of has the contours of an unwind here. You've got the vix significantly higher as well. What do you make of the market as as we've seen it today.
Well thanks for having me. You know the market. — Has been kind.
Of climbing a wall of worry. Ai fears escalated this week. And I think because it's friday and there's I think concerns that you know with oil rising you know, could tensions or the war escalate over the weekend.
So I think it makes not it doesn't surprise me that markets are unwinding today, but I think before viewers think that this is, you know, the start of a bigger downturn, I mean, markets are at support. Our technical strategist mark newton thinks we actually probably could rally either bottom today or on monday. And I think from a fundamental perspective, I mean, as much as we should, you know, respect the idea that like ai, debt markets may not be that confident, you know, the fundamental story and the and the drivers of ai are intact.
So to me, when you have the fundamentals holding in and markets getting fearful, it's actually a pretty good risk reward setup for investors.
So you'd be, tom buying this pullback everywhere. Or are there specific pockets that you feel like are kind of reaching that that technical area that makes them attractive for a bounce?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fundamental ai
- ai drivers
- market reaction
- daily market action
- fund strategy
Companies and tickers mentioned
- Solus Alternative Asset Management
- Fundstrat Global Advisors
- Ned Davis Research
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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