The Case for a Correction

Fundstrat's Tom Lee argued on CNBC this week that the AI selloff is "a very healthy correction" nearing its end. His reasoning: shorting tech has "become a consensus" trade, Treasury yields are back below 5%, and the Fed may be "flipping potentially dovish." He also sees tighter credit markets as healthy, since they help prevent a runaway speculative boom, and estimates roughly $30 trillion of AI infrastructure spending over the next 25 years. Not everyone agrees: Bank of America analysts warn that the AI buildout follows a classic capital cycle, which has often ended in disappointment even when the technology delivered, and Meta's results showed how heavy spending can weigh on cash flow.