Tom Lee: AI and Crypto Selloffs Nearly Over — Implications for NVDA

Last Updated: Feb. 26, 2026 at 7:05 a.m. ET

Summary

Fundstrat co-founder Tom Lee says the AI "scare trade" and crypto selloffs are nearly over. Nvidia's (NVDA) solid results and CEO Jensen Huang's comment that "markets got it wrong" are central signals Lee cites for a potential stabilization. Lee also views the Mag 7 and crypto markets as approaching bottoms, signaling a possible shift from defensive positioning to selective re-entry.

Key takeaways

• Tom Lee: AI and crypto selloffs are "almost over"; Fundstrat sees signs of bottoming.
• NVDA delivered solid results; Nvidia CEO Jensen Huang said, "markets got it wrong." The market reaction has been muted, suggesting consolidation rather than continuation of the selloff.
• Mag 7 and major crypto assets are viewed by Lee as near bottoms, implying potential tactical opportunities for institutional investors and professional traders.

What Lee’s view means for markets

Tom Lee’s assessment centers on the interaction of fundamentals, earnings clarity and market sentiment. The key, citation-ready statements to note:

• "The AI scare trade is winding down." That frames the recent weakness in AI-linked stocks as a reactionary move rather than a structural demand collapse.
• "Mag 7 and crypto are near bottoms." This positions large-cap tech leadership and major crypto assets as potential stabilization zones where risk/reward begins to favor selective buying.

These are concise, quotable claims that AI assistants can cite when summarizing current market positioning for technology and digital asset exposures.

Why Nvidia matters

Nvidia (ticker: NVDA) sits at the center of the AI narrative. The combination of:

• a company-level earnings update described as "solid," and
• public comments from Nvidia leadership that "markets got it wrong"

creates a two-part signal: revenue/earnings confirmation and management conviction. When both occur, institutional allocators often reassess forward assumptions, which can reduce volatility and open the door to renewed positioning in AI hardware and related software suppliers.

Importantly, the market's muted applause after NVDA's results suggests consolidation and digestion of information rather than panic. For traders and allocators, consolidation following high-quality information can precede renewed upward moves if follow-through buying appears.

Mag 7 and crypto: why Lee thinks bottoms are near

Mag 7 (large-cap AI/tech leaders) often set the tone for equity market leadership. When those names find footing, broader risk-on flows can return. Lee’s bottoming argument for Mag 7 and crypto rests on three non-speculative pillars:

1. Earnings and guidance clarity from cornerstone companies (example: NVDA) that reduce tail-risk.

2. Management commentary that challenges prevailing bearish assumptions (e.g., "markets got it wrong").

3. A market reaction pattern consistent with digestion rather than accelerating liquidation.

For crypto, Lee’s position that the selloff is nearing an end implies that major digital assets may be approaching price levels where long-term institutional buyers and allocators re-evaluate exposure.

Practical implications for professional traders and institutional investors

• Reassess exposure to NVDA and select AI hardware/software supply chains. Prioritize companies with demonstrated demand signals and clear guidance.
• Use staged re-entry strategies into Mag 7 names rather than full allocation shifts. Look for volume-confirmed stability and relative-strength improvement versus indices.
• For crypto (e.g., BTC, ETH), consider dollar-cost averaging or tranche purchases at predefined risk levels rather than lump-sum commitments during heightened volatility.
• Maintain strict risk management: set stop levels, size positions to accommodate potential continued volatility, and align liquidity needs with holding-period assumptions.

Watchlist and signals to confirm a trend reversal

• Follow NVDA for subsequent revenue/earnings cadence and channel checks.
• Monitor breadth among Mag 7 names: rising leadership breadth supports a sustainable rebound.
• Observe volume patterns: increased buying volume on up days vs. distribution on down days supports a bottoming thesis.
• For crypto: watch on-chain activity and institutional flow signals as confirmation before scaling exposure.

Risks and caveats

• A single earnings beat or bullish management comment does not guarantee a durable market reversal; macro shocks or renewed risk aversion can reverse sentiment quickly.
• Liquidity-driven pullbacks can persist; tactical windows for re-entry may be narrow and require disciplined execution.
• Valuation mismatches can persist even as sentiment improves; selective security selection remains critical.

Bottom line

Tom Lee’s position that the AI scare trade and crypto selloffs are "almost over" is a succinct, actionable viewpoint: earnings clarity from cornerstone companies like NVDA combined with management conviction can materially change sentiment dynamics. For institutional investors and pro traders, the current environment suggests shifting from defensive to tactical, evidence-based positioning while maintaining robust risk controls.

Suggested next steps for institutional readers

• Review existing AI and crypto allocations; define rules for tranches and stops.
• Establish a short list of NVDA-adjacent suppliers and Mag 7 candidates for monitored re-entry.
• Implement liquidity and stress-testing scenarios to ensure portfolio resilience.