Tom Lee, a major bull in the crypto world: The sell-off of AI and cryptocurrencies is nearing its end.

AI trading and crypto assets may be approaching a phase bottom after a period of intensive sell-offs. Fundstrat co-founder and Head of Research Tom Lee believes that the pullbacks in software stocks, Mag 7, and cryptocurrencies have entered their "last few weeks." This judgment comes as Nvidia delivers "robust" performance, but the market response remains cautious. Nvidia CEO Jensen Huang also publicly stated that the market’s sell-off of the software sector was “misguided.” Whether this view will next be adopted by investors will directly impact the speed of sentiment recovery along the AI chain. Tom Lee said in a video briefing to clients, "Markets often bottom amid 'bad news'." Earlier this week, a viral "AI Doomsday" post from Citrini Research disturbed market sentiment. He believes such shocks may actually indicate a bottom is forming. Strategically, he uses the “January Barometer” to provide support for risk assets: after the S&P 500 rose 1.5% in the first week and 1.3% for the month of January, February is usually a “month of giveback,” with a median decline of about 0.4%. "March may turn strong, with an average increase of about 2%, and April could perform even better." Bottom Signal: Bad News Triggers "Bottom Mechanism", Rotation Approaches Extremes Tom Lee’s core logic is “bad news marks the bottom.” He specifically mentions the viral bearish content from Citrini Research earlier this week as impacting sentiment, and based on this, judges the market may "have reached quite a late stage." In his view, the process of funds exiting crowded trades is approaching an extreme, implying marginal selling pressure is easing. He told clients, "Mag 7’s decline is about 95% completed, software sector sell-off is about 99% done, and the crypto pullback is in its last few weeks." AI Trading Stress Points: Nvidia Results Strong, Software and Mag 7 Show Signs of Recovery The sentiment recovery along the AI axis "first depends on whether the 'hardware strong, software weak' divergence can be eased." Jensen Huang said the market made a mistake selling software, providing a clear contrarian signal for software chain expectations. Tom Lee also looked at Nvidia’s earnings from the fundamentals and valuation, saying its quarterly revenue hit a record, net profit was strong, and its forward P/E ratio is below 20 times—“about half that of Costco’s valuation.” In trading terms, "he emphasized that software stocks have risen for two consecutive days and believes February 23 is a phase bottom," and Mag 7’s rebound since February 17 aligns with his judgment that “the sell-off is nearing its end.” Cryptocurrency: Pullback May Enter Last Phase, Tom Lee Bets on ETH Rebound In the crypto market, Tom Lee continues to take a bullish stance. "He believes this round of decline is nearing its end, particularly highlighting that ETH will stop falling and rebound." It should be noted that Lee is also Chairman of BitMine, an Ethereum treasury company. This identity means his views could be seen as stronger expressions of position by the market, and investors will pay more attention to potential conflicts of interest when considering his judgment. Allocation Clues: Optimistic About Pro-cyclical Themes for 2026, Bets on Core Asset Comeback In terms of sectors and style, Tom Lee maintains his theme framework toward 2026, saying energy and basic materials are directions he previously emphasized, both have already seen gains this year. He also believes that in a “stronger 2026,” industrials, financials, and small caps have room to rise. At the same time, he has not abandoned his previous core bullish targets: he remains positive on Mag 7, Bitcoin, and ETH. Lee has previously been seen as a rather accurate market forecaster for advising buying stocks at the pandemic lows and catching the 2023 bull market, but has also made more aggressive price predictions for crypto assets, including saying Bitcoin could “easily reach $200,000 by the end of 2025,” and forecasting it might rise to $1 million in the coming years. Risk Warning and Disclaimer The market carries risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it consider the particular investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their circumstances. Investment decisions based on this content are your own responsibility.