Dan Ives Warns Chip Stocks Aren't Done Falling, Sees Another 12% Drop — But Tom Lee Calls AI Selloff an 'Overreaction,' Predicts 20% Tech Rally

Yorkville Ives Partner and tech bull Dan Ives has predicted a 10%-12% downside for chip stocks during the current technology selloff, while Fundstrat’s Tom Lee called the post-election pressure on AI-related names an "overreaction" and said technology stocks could rally 20% from current levels.

Ives Sees More Pain For Chip Stocks

Ives told Bloomberg that investor anxiety has reached a "gut check period" for the technology trade.

According to Ives, hyperscaler capital spending and Palantir Technologies Inc.’s (NASDAQ:PLTR) AI use cases remain supportive, but he sees disruption across memory players, Intel Corp. (NASDAQ:INTC), advertising and software stocks.

Asked how much further chip stocks could fall after the interviewer noted they were roughly 30% below their highs, Ives said, "I think another 10 to 12% down."

He repeated the 10%-12% estimate while discussing the NYSE Semiconductor Index, tracked by iShares Semiconductor ETF (NASDAQ:SOXX), before suggesting that level could begin presenting opportunities to reconsider the sector.

However, Ives said he believes the underlying AI fundamentals will ultimately "prove it out," citing Palantir, Apple Inc. (NASDAQ:AAPL) and the hyperscalers.

Lee Calls AI Selloff An ‘Overreaction’

Lee, Fundstrat Global Advisors’ co-founder and head of research, took a more bullish view following the election-driven pressure on AI and data-center stocks.

"I think there’s a knee-jerk reaction," Lee told CNBC, arguing that rising AI usage would eventually make computing capacity scarce again.

Lee said the "AI trade is very much alive" and argued that states would continue seeking the investment and revenues generated by data-center projects.

"I do think it’s an overreaction today," Lee said. Looking toward year-end, Lee said hedge funds could move back into technology following the correction. "I think a lot of this is going to be a very, very strong tech rally," he added. "Tech could rally 20% from here."

Fundstrat separately said on Wednesday that it viewed the risk-reward for AI and technology as attractive following the midterms.

How Have the Broader and Tech Index Trackers Performed?

The following table shows the performance of SOXX along with the SPDR S&P 500 ETF Trust (NYSE:SPY), the Invesco QQQ Trust ETF (NASDAQ:QQQ) and the SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), which track the S&P 500 index, Nasdaq 100 index and Dow Jones Industrial Average, respectively.

ETFs	1-Month	6-Months	YTD	1-Year	5-Years
DIA	4.31%	8.90%	10.93%	13.21%	47.53%
SPY	-0.37%	6.80%	12.45%	13.56%	64.23%
QQQ	-7.69%	2.83%	12.64%	11.74%	73.76%
SOXX	-23.52%	-2.52%	47.71%	46.06%	164.63%

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