Tom Lee Says Memory, Semis, AI, Neocloud Stocks Could See The ‘Biggest Bounces’ After Midterm Elections

• In an interview with CNBC, Tom Lee said a Democratic Congress could “reshape AI” without stopping it.
• He compared the potential market reaction with Trump’s 2016 win, when stock futures fell overnight before equities rallied during the following session.
• He also expects investors who built short positions in technology stocks ahead of the midterms to help fuel the potential rebound through short covering.

Fundstrat co-founder and Bitmine Immersion Technologies (BMNR) chairman Tom Lee said on Wednesday that the technology stocks hit hardest heading into the midterm elections are likely to rebound the most, even as several of them traded lower before the open.

“I think the stocks that got hit the hardest into the midterm elections – which are memory, semis, data centers and neoclouds – I think these are going to see the biggest bounces,” Lee said in an interview with CNBC. “Even the ones that are selling off today. I think potentially, by the end of day, they could be reversing.”

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Democrats won control of both chambers of Congress on Tuesday, flipping seven Republican-held Senate seats in North Carolina, Ohio, Iowa, Maine, Kansas, South Carolina and Texas. Races in Mississippi and Alaska were still uncalled.

In pre-market trade, the companies Lee expects to rebound were still under pressure. CoreWeave (CRWV) fell 2.8%, and IREN (IREN) was down 3.2%. However, Nebius Group (NBIS), which has also been under scrutiny, gained around 1.7%. 

Lee Says Democratic Win Could ‘Reshape AI’

Lee said fears about the tech industry had been building, driven by the growing gap between winners and losers in the economy and divisions over AI. “I think it is kind of coming to a head. That’s probably why markets are reacting so sharply,” he said.

However, he doesn’t see a Democratic Congress as hostile to the sector. “The Democratic Party and the Republican Party aren’t either enemies or friends of tech. Tech has done well under both administrations,” he said.

According to Lee, a Democratic Congress could set new rules that protect people while letting the buildout continue. 

“I don’t think this is an ‘AI is going to grind to a halt’ situation. I think this is really a chance to reshape AI in ways that there are some of the dangers that we’ve known about that we can actually start to address.”

– Tom Lee, Fundstrat, Co-Founder and Managing Partner

Lee Sees A Repeat Of The 2016 Market Reaction

Lee pointed to the night President Donald Trump first won the White House. “If we go back to 2016, the night President Trump won the White House, the futures overnight were down sharply, but then the market rallied strongly the day the market opened,” he said. “I think that’s what we’re going to see.”

He also said he expects investors who bet against tech to buy back shares. “There’s been a lot of shorting tech into this election. So, I think you’re going to have some short covering as well,” he said. 

Futures Rebound, But AI Stocks Remain Mixed

U.S. stock futures rebounded sharply in early morning trade on Wednesday. S&P 500 futures pointed to a gain of about 54 points at the open, Dow futures about 534 points and Nasdaq futures about 150 points.

Large technology companies were in the green. Amazon (AMZN) gained 3.2%, Meta Platforms (META) 2.2%, Alphabet (GOOGL) 1.7% and Apple (AAPL) 0.9%.

Oracle (ORCL), which is building large AI data centers, was down 1.8% in pre-market trade. SpaceX (SPCX) fell 4.7%, and Tesla (TSLA) fell about 3%. Both are tied to Elon Musk, who spent heavily on the elections, and to the AI buildout.

Read also: US Midterm Elections: DJT Stock, TRUMP Coin Fall While Stocks, Crypto Rally With Democrats Sweeping Congress

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