A massive margin call and ‘push-button liquidity’ have torched stocks, but they’re now poised to rebound, top Wall Street forecaster says

Stocks have taken a beating recently as investors dump one-time darlings of the AI trade, but they will rebound, according to Fundstrat Global Advisors cofounder Tom Lee, who has a strong recent track record of market forecasts.

Chip stocks in particular have been leading the decline, which left the S&P 500 down 1.6% for the week and the Nasdaq off 2.9%. The latest catalyst was the release of a Chinese AI model that cast doubt on hyperscalers’ gargantuan spending plans.

In an interview on CNBC on Friday, Lee argued that the companies selling off are at the center of “one of the most important strategic initiatives” for the U.S., namely AI, and they still have years of runway ahead.

The market pullback is actually healthy because it reduces speculation ahead of upcoming earnings reports from the AI sector, he added.

“I would still stick with those,” Lee said. “I think those names are going to bounce later this year. So I don’t think that the...