Fundstrat Global Advisors co-founder Tom Lee was one of a handful of Wall Street voices last year who predicted a The stock market skyrocketed while most of his peers saw a decline amid growing expectations of a recession.
But he – and the American economy – proved the doomsayers wrong. Actually, among forecasters surveyed by BloombergLee’s call for 2023 turned out to be The most accurate things.
And this year, he’s still making his shots and finishing them. In early June, he said The S&P 500 will hit 5,500 at the end of the month. As of Friday’s close, it was at 5,464.62.
Now, he has a longer-term forecast, and it’s a staggering number: by the end of the decade, Lee says the S&P 500 could hit 15,000, representing a gain of more than 170%.
In a recent episode of by Bloomberg Odd lot audio file, recorded on Tuesday, he begins by explaining his evidence-based approach to forecasting, looking at history and assets. He says the bond market is smarter than the stock market: “That’s why people say stocks are the land of C students.”
He also believes investors can’t fight the Federal Reserve and are focusing more on themes that will drive growth, such as how younger generations are reshaping the economy, shortages, and unemployment. Global labor will boost AI and technology stocks, as well as energy security and cybersecurity. By picking the strongest stocks in each theme, Lee said, he has outperformed the market every year since 2019.
Wall Street, he added, often underestimates the impact of new technologies, which are often adopted by young people in their teens and 20s while most top investment professionals are in their 40s and 20s. 50, while also noting that mobile phones were initially considered toys for the rich. . Something similar is happening with AI.
“The AI adoption rate is amazing, but the use case is important because there is a labor shortage,” Lee said. “So it seems to me that we are most likely underestimating the revenue that all of these companies will generate.”
And as demand for workers continues to outstrip supply, AI will become more important. By the end of the decade, he estimates the global labor shortage will be equivalent to 40 million workers, or about $3 trillion in wages. He explained that most automation comes from hardware like semiconductors, which means whoever supplies chips could have $2 trillion in revenue.
Lee said eventually, technology will account for 40%-50% of the global stock market, up from about 20% now.
“In a normalized world, if this is a demographically normal S&P cycle, I can provide the following chart, the S&P will likely reach 15,000 by the end of the decade,” he said. “As you move to longer time frames, that’s probably where I think we’re headed.”
The stock market is currently heavily focused on technology and AI stocks, with Nvidia alone accounted for more than a third of the S&P 500’s gain This year. Meanwhile, Wall Street is trying to keep up with the market’s ongoing recovery, with Many analysts raised their year-end targets.
Such price increases and market concentration have raised concerns that the AI hype is a sign of a bubble about to burst. But Lee downplayed those worries, pointing to key differences between previous bubbles like the dot-com boom and bust.
He noted that Nvidia has a much greater competitive advantage than Cisco did in the early stages of the internet boom. And unlike the dot-com bubble, there is a lack of overhyped IPOs today, he added.
Lee isn’t the only Wall Street bull making bold predictions. Ed Yardeni is buzzing about another “Roaring 20s” super cycle and has said The S&P 500 will rise to 6,000 next year.
And by the end of the decade, he said stock indexes can reach 8,000—not as high as Lee’s estimate but still good enough for a 46% increase.
