Tom Lee "Semiconductor stocks, now that they've crashed, is the time to buy low"

▲ U.S. stock market, Nasdaq, semiconductor stocks, bear market/AI generated image

The stock market, which was once red-hot, has plummeted into a bear market, but a prominent Wall Street bull has instead declared, “Now is the time to buy low.” Amid the fear that has gripped semiconductor stocks, a buying thesis aiming for a year-end rebound has emerged.

According to investment media outlet MarketWatch on July 8 (local time), Fundstrat research director Tom Lee positively assessed the short-term market outlook. Fundstrat is utilizing the market decline as a buying opportunity. Lee also acknowledged that investor concerns have not diminished.

Anxiety surrounding the enthusiasm for AI investment has hit semiconductor stocks hard. The iShares Semiconductor ETF (SOXX) has fallen by about 14% in July. Samsung Electronics dropped 6% on Wednesday and plunged 7% the day before. Lee stated, “The market’s reaction to Samsung Electronics’ earnings and reports that Amazon (AMZN) will not issue additional bonds after its recent bond issuance raise concerns about the visibility of AI investment.”

However, Lee highlighted Samsung Electronics’ past precedent of rebounding after significant declines. He also presented improvements in the Institute for Supply Management (ISM) index as a basis for a bullish outlook. He explained that past improvements in this index have been linked to an acceleration in earnings per share growth. He also mentioned the possibility of higher corporate earnings forecasts for 2027.

Falling oil prices were also cited as a variable that would support a stock market rebound. Lee believed that if oil prices fall, the possibility of the Federal Reserve cutting interest rates could re-emerge. He also suggested the possibility that fund managers, who recorded poor performance earlier in the year, might buy stocks during a market downturn.

According to Lee’s data, 76% of large-cap growth fund managers are trailing their benchmark by 10 basis points. Only 23% outperformed the benchmark by at least 10 basis points. This is the lowest level since 2022, and typically, this ratio reaches 50%. This is the reason why Lee maintains a buy-low strategy even as the market downturn deepens.

[Key Summary of Article]

-The iShares Semiconductor ETF fell by about 14% in July, and Samsung Electronics also plunged for two consecutive days.

-Tom Lee presented a buy-low strategy based on improvements in the ISM index, the possibility of higher earnings in 2027, and falling oil prices.

-With 76% of large-cap growth fund managers trailing their benchmark, there is a possibility of increased buying pressure during a market downturn.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*