"AI Shock: Lee Sees Nvidia Opportunity Amidst Market Overreaction"

Artificial Intelligence (AI) has been a hot topic in the tech industry, and the recent release of DeepSeek, a low-cost Chinese AI model, has sparked significant market reactions. Fundstrat's chief investment officer, Tom Lee, has weighed in on the situation, suggesting that the market sell-off triggered by DeepSeek is an overreaction and presents opportunities for long-term investors.

In an interview on CNBC's "Closing Bell," Lee stated that Monday's market correction is likely an opportunity for long-term investors. Stocks and crypto markets plummeted as investors processed the implications of DeepSeek, including its potential impact on AI chipmaker Nvidia (NVDA), one of the hardest hit stocks. Lee believes that the Nvidia decline is an overreaction and that investors should view this as an opportunity.

Lee also expressed his surprise at the possibility of Nvidia becoming obsolete in the wake of DeepSeek's release. He noted that the global labor shortage and Nvidia's chip dominance make it unlikely that the company would face significant challenges from the new AI model. Unless a new model emerges that doesn't require graphics processing units (GPUs) entirely, Lee believes that markets should be ready to buy Nvidia shares.

In addition to his views on the tech sector, Lee is bullish on the financial sector overall in 2025. He cited the new administration, a dovish Fed, and low yields as factors that could lead to upside for capital markets activity and multiples. As a result, Lee considers financials to be the number one S&P sector idea for the year.