Tom Lee: Upside case for stocks the rest of this year is strengthening
Speakers
Tom Lee
— Managing Partner & Head of Research, Fundstrat
Summary
Tom Lee of Fundstrat discusses the strengthening upside case for stocks, citing higher earnings estimates, AI productivity, and a potential drop in risk premia. He explicitly forecasts the S&P 500 above 7700, sees the software ETF IGV rebounding, and recommends holding gold and crypto in portfolios.
- Tom Lee says the three initial risks for 2025 (Iran, private credit, new Fed chair) are being resolved.
- Earnings estimates are rising and AI is delivering productivity gains.
- He believes S&P 500 above 7700 is very probable for the year.
- The software ETF IGV is rebounding due to improved private credit underwriting.
- Gold should be a portfolio holding given strong total returns.
- Crypto is also recommended as part of a diversified commodity allocation.
- Two scenarios for Iran war: extended war hurts oil and growth, short war supports markets.
- The market appears to be betting on a short conflict.
Trade Ideas
IGV rebounding on private credit improvement
The software ETF (IGV) is rebounding because private credit underwriting looks better than expected and many private credit loans are tied to software companies. IGV fell to 72 and is back to 85.
S&P 500 above 7700 probable
The upside case for stocks the rest of the year is strengthening driven by higher earnings estimates, AI productivity gains, and a drop in risk premia if Middle East tensions ease. He explicitly states S&P 500 above 7700 is very probable.
