Tom Lee, co-founder of Fundstrat and chairman of Bitmine Immersion Technologies, said the recent selloff in artificial intelligence stocks has reached its bottom. Speaking in a CNBC interview on Squawk Box, Lee argued that demand for AI remains constrained by supply rather than weakening fundamentals, and that the crypto market's limited reaction to a multibillion-dollar hack suggests most selling pressure has already passed.

The call matters because the decline has spread well beyond individual AI companies. Large technology stocks sit inside the funds many people use to invest for retirement, meaning the selloff has touched a broad swath of investors. Lee's case hinges on separating a sector that cannot grow quickly enough from one that has overbuilt relative to what buyers actually want.

AI Stock Selloff and the Supply Constraint Argument

Lee said the market for AI remains very tight, with growth limited by the ability to build and expand infrastructure rather than by a lack of demand. Political pushback and limits on spending are tempering the pace of expansion, but he does not see those forces as proof the boom has crested. "That is slowing the growth, but it's not creating a top," he said.

That framing carries weight for the firms erecting AI's physical backbone, such as data centers, the sites where the computers powering these systems are housed. When supply runs short, buyers may face delays, yet vendors can also find themselves unable to convert bookings into actual sales. Robust appetite for AI products has failed to shield chipmakers from worries about their earnings, and money continues to leave Bitcoin funds.

Intel illustrated the point vividly on Friday: its stock tumbled close to 30%, landing at $65.76, after the company issued a fourth-quarter outlook that disappointed Wall Street. Revenue from its data center and AI unit had climbed 78% year over year to $7.3 billion, but production bottlenecks kept it from fulfilling all the demand. The company guided for quarterly revenue of $15 billion to $16 billion, a midpoint roughly $1.6 billion shy of what analysts had penciled in. Pressure from its softer PC segment compounded the problem, demonstrating that robust AI appetite can sit alongside a sinking share price.

Semiconductor names powered much of the year's advance before accounting for the bulk of October's retreat. Semiconductor stocks shed 17% during the month, while the S&P 500 gave up less than 1% across the same stretch. Lee said the correction has largely run its course across the broader market, noting that the equal weight index is bouncing back. "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.

Crypto Resilience After the Binance Hack

For his second line of reasoning, Lee turned beyond equities. He highlighted how digital assets weathered the Binance breach, an incident the exchange first pegged at roughly $6.3 billion in impact, with relatively little damage. "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.

As Lee sees it, when a market takes in bad news without falling much further, it suggests the pool of remaining sellers has thinned. Lee 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. In his view, the scale of the theft exposed shortcomings in exchange operations rather than any flaw in the underlying blockchain, and he called it encouraging that Binance can afford to make customers whole.

Friday still brought pain for crypto: Bitcoin slid roughly 4% to about $76,400, and over $1.3 billion in leveraged positions were liquidated. American spot Bitcoin ETFs, stock-like vehicles that hold the cryptocurrency directly, recorded $643.2 million in withdrawals that day, the biggest single-day exit of October. Binance said on Friday that about $3 billion of the affected assets had been frozen and pledged to cover losses using its emergency reserve and company funds.

By Monday morning, Bitcoin had climbed back above $78,000, gaining 0.3% over the prior 24 hours, after touching a trough near $76,000 on Friday. Retail sentiment around the apex cryptocurrency remained in the 'extremely bearish' zone over the past day, according to Stocktwits data cited by NewsBreak.

Market Context and Investor Sentiment

Ahead of Monday's open, American stocks were recovering ground following the prior week's heavy selling. The SPDR S&P 500 ETF rose 0.38%, the SPDR Dow Jones Industrial Average ETF added 0.36%, and the Nasdaq-100 tracking Invesco QQQ Trust advanced about 0.66%. Retail sentiment around SPY on Stocktwits shifted to 'neutral' from 'bullish' territory over the past day.

Lee acknowledged how difficult it is to identify the point where prices stop falling. "Bottoms are dangerous because you don't know how much more downside you have at the bottom," he said. He listed several sources of investor anxiety, among them the war, AI spending, debt markets, the Fed and inflation.

Despite those concerns, Lee forecast that stocks will finish the year strongly even though the path has been difficult. "I do think markets are going to exit the year strong, but they have been struggling," he said.

Midterm Elections and Policy Outlook

On midterm elections, Lee said the markets may prefer a divided government because it can limit major policy changes. "Markets, in some ways, prefer gridlock because then you don't have too much policy creep," Lee said. Even if Democrats win both chambers of Congress, President Donald Trump would retain his veto power, he noted.

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.

Disclosure

Tom Lee is one of several investors in Dastan, Decrypt's parent company, according to a disclosure published by Decrypt.

Conclusion

Tom Lee's call that the AI stock selloff has reached its bottom rests on two pillars: a market for AI that remains constrained by supply rather than weakened demand, and a crypto market that absorbed a $6.3 billion hack with limited price damage. Whether the bottom holds will depend on how those dynamics play out in the coming weeks, with the midterm elections and continued infrastructure spending among the factors Lee has flagged as relevant to the market's path.

Frequently Asked Questions

What did Tom Lee say about the AI stock selloff?

Tom Lee said the AI stock selloff has reached its bottom, arguing that demand remains constrained by supply and that the correction has already played out across most of the market. He made the comments in a CNBC interview on Squawk Box, pointing to tight AI infrastructure capacity and a recovering equal weight index.

Why does Tom Lee think crypto's reaction to the Binance hack signals a market bottom?

Lee argued that crypto's muted response to the $6.3 billion Binance hack suggests most sellers have already exited. He compared it to the 2025 Bybit hack, which was one quarter the size but triggered a 20% drop in crypto prices, and said the limited decline this time indicates selling pressure has largely passed.

How much did Bitcoin fall after the Binance hack?

Bitcoin fell about 4% to roughly $76,400 on Friday, with more than $1.3 billion in leveraged positions forcibly closed. U.S. spot Bitcoin ETFs also shed $643.2 million that day, their largest daily outflow of October. By Monday morning, Bitcoin had crossed $78,000, up 0.3% in 24 hours.

What happened to Intel shares and why?

Intel shares plunged nearly 30% to $65.76 on Friday after a disappointing fourth-quarter forecast. The company projected quarterly revenue of $15 billion to $16 billion, with the midpoint about $1.6 billion below analysts' expectations. Its data center and AI revenue rose 78% to $7.3 billion, but manufacturing constraints and a weaker PC business weighed on results.

What did Tom Lee say about the midterm elections and markets?

Lee said markets may prefer a divided government because it limits major policy changes, noting that even if Democrats win both chambers, President Trump would retain veto power. He also expects Democratic lawmakers to continue supporting AI infrastructure due to economic benefits for their districts, despite concerns about resistance to data-center construction.