Bottom Already In? Hedge Fund Manager's Bold S&P 500 Target For 2025 | Thomas Hayes
Speakers
Thomas Hayes
— Co-founder, Crypto Is Macro
Summary
Thomas Hayes of Great Hill Capital argues the April selloff was a man-made correction and expects the S&P 500 to finish 2025 up 7-9%, with possible low-double-digit upside. He favors international equities, China and Alibaba, Hong Kong-listed Chinese shares, auto parts suppliers like Cooper Standard, materials, a weaker dollar, and energy and natural gas tied to AI demand. He is cautious on automakers and Tesla and sees oil services as a developing volume play.
- Hayes expects tariff volatility to resolve to the upside and sees S&P 500 gains of 7-9% for 2025.
- He views tariffs as likely settling near a net 10% rate that raises $300-400 billion and supports lower rates.
- He prefers international equities over US equities due to a long-cycle shift and earnings growth abroad.
- Alibaba is a major position and he prefers Hong Kong-listed China exposure to avoid ADR delisting risk.
- In autos, he favors suppliers over OEMs, highlighting Cooper Standard and warning Tesla about pricing pressure.
- He likes materials, expects the dollar to resume its intermediate downtrend, and wants more energy exposure.
- Natural gas is his preferred AI and data-center energy play, while oil services is only a developing idea.
- He remains constructive on the US consumer because jobs remain solid despite weak sentiment.
Ideas
S&P 500 year-end rally likely.
Hayes expects the S&P 500 to finish 2025 up 7-9%, with possible low-double-digit gains if breadth improves after the Zweig breadth thrust. He argues Trump 2.0 tariff and tweet volatility should resolve to the upside like 2018, earnings and guidance are resilient, 2026 EPS estimates of $302 imply a reasonable ~18.5x multiple versus the 10-year average of 18.3x, and the US consumer remains supported by jobs.
Cooper Standard benefits from auto volume recovery.
Cooper Standard is Great Hill's largest position, an auto parts supplier of sealing systems and fluid transfer systems predominantly to US OEMs. It is a play on vehicle volume recovery to 17.5-18 million SAR, helped by dealer incentives and lower rates, and the stock was up 43% on Friday.
Auto suppliers outperform; OEMs face margin pressure.
He prefers auto parts suppliers over automakers and OEMs. OEMs are likely to race to the bottom on margins with rising dealer incentives and massive volume, while suppliers benefit from higher vehicle volumes. Vehicle sales are below normal at 15.2 million SAR, normalizing toward 17.5-18 million, with the average car on the road at 13.5 years, millennials forming families, and lower rates likely to help demand.
Auto suppliers outperform; OEMs face margin pressure.
He prefers auto parts suppliers over automakers and OEMs. OEMs are likely to race to the bottom on margins with rising dealer incentives and massive volume, while suppliers benefit from higher vehicle volumes. Vehicle sales are below normal at 15.2 million SAR, normalizing toward 17.5-18 million, with the average car on the road at 13.5 years, millennials forming families, and lower rates likely to help demand.
Tesla faces pricing pressure from supply.
Tesla could face a rude awakening if it believes it can keep charging much higher tariff-related prices. Supply is coming back as manufacturers replenish inventories, creating oversupply and incentives, which should force Tesla and other automakers to bring prices down in coming months.
International equities to outperform US.
He believes the 10-15 year cycle is turning toward international equity outperformance versus the US. US exceptionalism remains, but Mag 7 multiple and weight normalization, earnings growth in international pockets like China tech, and institutional flow flywheel should favor international equities over US equities in coming years.
Alibaba undervalued; AI and cloud upside.
Alibaba is a huge position with an average basis around $83 and he thinks the rally is just getting started. He views it as undervalued sum of the parts: number one cloud provider in China, number one retailer to the middle class, Qwen 2.5 AI outperforming peers, equity stakes in Chinese AI startups via cloud services, benefits from stimulus and China's consumption shift, and toll-taker economics as consumption rises. Delisting would not change its earnings power, free cash flow, or buybacks.
Prefer Hong Kong listings over ADRs.
He shifted China equity exposure to Hong Kong-listed shares to hedge US delisting risk, which he estimates at about 20%. Delisting Chinese companies would not impair their earnings power or cash flow and would mainly hurt US investors, so Hong Kong listings preserve exposure while reducing political and delisting risk.
Prefer Hong Kong listings over ADRs.
He shifted China equity exposure to Hong Kong-listed shares to hedge US delisting risk, which he estimates at about 20%. Delisting Chinese companies would not impair their earnings power or cash flow and would mainly hurt US investors, so Hong Kong listings preserve exposure while reducing political and delisting risk.
China equities offer recovery upside.
He is implicitly betting on China's economy and sees opportunities in Chinese equities. China has prepared for a trade war, US-bound exports are a de minimis part of its GDP, the yuan was devalued about 20%, a US-China deal is likely, and if no deal occurs China can amp up stimulus, all of which support Chinese equities.
Materials sector contrarian rebound play.
Materials have been left for dead and he likes materials and some commodity plays, suggesting contrarian upside in the sector.
US dollar resumes intermediate downtrend.
He had been bearish on the dollar when that view was unpopular. Now that dollar bearishness is consensus, he expects a short-term countertrend bounce and then a resumption of the intermediate downtrend in a few months.
Energy exposure favored on AI demand.
He wants more energy exposure and sees opportunities tied to AI and compute demand. Natural gas is a transition fuel for data centers, and oil services could offer a volume play rather than a direct oil-price bet.
Comstock Resources gains on Haynesville natural gas.
Comstock Resources is a big position bought from just below $9 and has risen substantially. It is a natural gas play in the Haynesville, with Jerry Jones owning 66% of the company.
Oil services volume setup worth watching.
He is exploring oil services as a way to gain volume exposure without directly playing the price of oil, similar to the auto supplier strategy of benefiting from volume while avoiding manufacturer margin wars.
Natural gas key AI power play.
Natural gas is a covert AI-driven play because data centers and compute demand require unlimited energy, and natural gas is likely to be the transition fuel. He sees a lot to do in the space.
Up Next
This The David Lin Report video, published May 06, 2025, features Thomas Hayes discussing SPY, CPS, Auto parts suppliers, CARZ, TSLA, ACWX, BABA, Hong Kong-listed Chinese equities, PGJ, FXI, XLB, USD, XLE, CRK, OIH, UNG. 16 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Thomas Hayes · Tickers: SPY, CPS, Auto parts suppliers, CARZ, TSLA, ACWX, BABA, Hong Kong-listed Chinese equities, PGJ, FXI, XLB, USD, XLE, CRK, OIH, UNG