Tom Lee Recommends Buying Tech Stocks on Dip, Calls Correction Healthy, Sees $30 Trillion AI Infrastructure

Fundstrat's Tom Lee advised investors to buy tech stocks during the current market decline, describing the sell-off as a "healthy correction." Lee said that as the AI industry kicks off a $30 trillion infrastructure expansion, capital flowing into the sector is "generating returns."

AI Infrastructure and Market Health

In an interview with CNBC on Thursday, Lee argued that widespread concerns surrounding AI are preventing the sector from forming a bubble.

"We continue to see amazing discoveries from AI," Lee said. He explained that as long as these technological advancements persist, "every dollar raised for AI is generating returns."

Lee noted that tight debt markets are currently limiting the industry from experiencing an "uncontrolled speculative frenzy," which he views as a positive development. "I think this is actually a very healthy correction," he stated.

Highlighting the scale of this emerging sector, Lee projected massive capital expenditures, estimating that "AI will spend $30 trillion over the next 25 years." He believes this represents infrastructure building even more critical than the previous rollout of mobile networks or highways.

Sell-Off Nearing Its End

When directly asked if he would buy the current market sell-off, Lee replied: "Yes." He explained his reasoning: "I think we are nearing the final phase of the sell-off because shorting tech stocks has become a consensus trade."

Lee added that previous macroeconomic headwinds are easing, noting that the Federal Reserve "may turn dovish" and that interest rates "have now fallen back below 5%."

Lee Defends Mag-7 and Semiconductor Stocks

On specific investment targets, Lee pointed to major tech components and companies. "I think AI and its bottlenecks lie in memory chips, Nvidia, and the Mag-7. They are being sold off because it's easy to short them right now," Lee said.

Additionally, Lee noted he is also bullish on software and cryptocurrency investments. He described the current broad cyclical trading landscape as "a coiled spring because fundamentals have remained strong."

To contextualize current market volatility, Lee compared the AI industry to the early public internet era, noting that in 1997, Cisco Systems experienced a "sharp drawdown of up to 50%" before rebounding significantly a year later.

How Are Stocks Performing?

The S&P 500 index is up 11.74% year-to-date. Similarly, the Nasdaq Composite is up 11.94% year-to-date, and the Dow Jones is up 9.27%.

On Thursday, the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust ETF, which track the S&P 500 and Nasdaq 100 respectively, closed mixed. SPY fell 1.18% to $763.96, while QQQ fell 2.86% to $704.47. Meanwhile, the State Street SPDR Dow Jones Industrial Average ETF Trust, which tracks the Dow, closed marginally higher by 0.036% at $527.89.

In Friday's pre-market trading, SPY fell 0.34%, QQQ fell 0.12%, and DIA fell 0.73%.