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One of Wall Street's most famous bulls, Fundstrat's Tom Lee, said yesterday that the S&P 500 could touch 7,900 or even 8,000 points this month. And note his choice of words: he said "chase." 8,000 points isn't the finish line— it's just...Yeah, I think deleveraging that happened weeks ago put a lot of cash on the sidelines, got sentiment quite bearish, and then on top of people getting very skeptical, the Fed got markets to de-risk.
And now, I think as earnings have been good and I think there's a rethink of how inflation might be cooler than expected , and of course AI still strong, there's going to be a chase. I think that chase takes us towards 7900. Earnings quarter is coming in more than $ 5 of what people expected at the start of the quarter.
But what's really more impressive is 2027 earnings are up now, so we're probably close to 410 for 2027 earnings and we're only weeks into earnings season. I actually think it might settle out closer to 425 by the time earnings season is over. I mean, the nuance in your bullishness, it has been and it remains to be that you still think we're going to have a sizable correction.
Have you seen...... that......you think? I don't. I think market of MA7 and software, crypto and now AI stocks, but we haven't had a broad risk-on, I think. That is later this year, and it probably is around this inflation derangement syndrome. That is the market hiring battle. Our take on inflation, weaker?
Think we aren't hiking. Even so, by the way, reports in some publications that the Fed is ready to do that if he has to, if inflation remains hot into that meeting, yeah. I think it's still hotly debated because there are economists who want the Fed to hike just to reestablish credibility with financial media.
Take a mistake for the consensus . I think still battle earnings are 50% year, excluding investments it's still up 22%. That's a huge step up in organic growth for the S&P 500, which was running at 13%last year, and it is broad. energy. Stocks are, more than a fifth is basically mid-to-high, small caps at a high, the UK at a high, Germany and France at a high, Brazil and Mexico almost at a high.
Let's take 30 seconds to get to know this man, Tom Lee, co-founder and head of research at Fundstrat. Why do people on the street call him the "King of Bulls"? Because for the past few years, he has been on the right side of almost every key turning point in the market. At the end of 2022, the market was full of pessimism, with everyone crying " recession." He went against the grain, saying the S&P would hit all-time highs in 2023.
At the time, how many people laughed and called him crazy? And what happened later? It came true. Since then, every year his annual targets have been criticized as being too high, but year after year, the market has caught up to them. But there is a key point here you must remember: he is never a "mindless" bull.
His style can be summarized in eight words: long-term bullish, cautious in the interim. In this interview, he displayed both of these sides, which is exactly why he is so valuable. Let's start with the conclusion and the three pillars behind it. The first pillar is deleveraging. What was the essence of that crash two weeks ago?
It wasn't that the fundamentals collapsed, but that leverage in the market had become too high, and the bubble needed to be squeezed out. This correction wiped out the leverage, forced cash to the sidelines, and pushed sentiment to the point of freezing. They call it a " reset," not a collapse. Nothing was broken; they just let the bloat out.
And after a reset, that money has to come back, right? And the second pillar is earnings. This is the real heavyweight part of the entire interview—he threw out a set of numbers. Quarterly earnings are $ 15 higher than what everyone expected at the start of the year. Even more staggering is the 2027 earnings forecast; just three weeks into earnings season, it’s already been revised up by $ 8.
He believes that by the time reporting wraps up, 2027 earnings will likely land around $ 425. Note that the Goldman Sachs president was saying the exact same thing the morning before. This isn't just one person's opinion. The third piece is inflation. The market is rethinking a question: could inflation be cooling down faster than everyone anticipates?
If inflation isn't that stubborn, the Fed has no reason to keep tightening. Capital will flow into the stock market with more confidence. With these three factors combined, he says reaching 7,900 to 8,000 this month is reasonable . Here, let's add a detail not mentioned in the original video: exactly how that 8,000 figure was calculated.
Actually, it's just a simple multiplication. The S&P 500 earnings multiplied by the market's valuation. If 2027 earnings really hit $ 425, and you give it a P/E ratio of 18 to 19, the result is 7,800 to 8,100. So, 8,000 wasn't just shouted out thin air; it was calculated using earnings and valuation as variables.
This is also why a veteran expert, who is usually cautious, said his own target price of 8,250 might even be conservative. Also, don't forget that the S&P 500 is already at 7,700 points; the gap to 8,000 is only about 4%. Tom Lee's real point is that the specific level doesn't matter; what matters is that the earnings curve is still trending upward.
As long as it doesn't stop, 8,000 is just a milestone on the road. That's the weight behind the phrase "8,000 is just the starting point." Next is the most information-dense part of the entire interview. Many think this bull market is just about AI and the "Magnificent Seven." If you cut out tech stocks, people assume the market would immediately fall apart.
But Tom Lee says even if you kick out tech entirely , and even if you shave another 10%off the total earnings, the remaining profits are still very strong. What does this show? AI is no longer just a story for chip companies; it has become orders for the entire industrial system . Look at the sectors: bank stocks are at all-time highs.
Insurance stocks are at all-time highs, and credit card companies collectively stated this quarter that consumers have no issues with spending. Then there is that eye-opening data: initial jobless claims have been below 200,000 for two consecutive weeks. What kind of concept is that? From 2000 until the outbreak of the pandemic, over those 20 years, this number never once fell below 200,000.
With employment this stable, there is simply no reason for consumption to collapse. Even more critical is the global resonance: stock markets in the UK, Germany, and France hit new highs, while Brazil and Mexico are nearing them, with mid-cap and small-cap stocks all at elevated levels . This shows that this market run is neither fueled by Federal Reserve easing nor driven solely by U.S.
AI; it is a case of global fundamentals strengthening together. This is why we say the bull market has entered its second phase: the first phase was the " Magnificent Seven" telling their story, and the second phase is the spread of earnings across the entire market. There is a deeper layer of incremental information here, which is that we previously had a fixed mindset: if the "Magnificent Seven," or stocks like Nvidia and AMD, fell 20%to 30%, the broader market would have to fall at least 5%to 7%.
Sometimes it would even reach 10%to 15%, but that didn't happen this time. The A-shares collapsed, yet not only did the broad market hold up, but other sectors actually picked up the baton instead—what does the situation look like now? Four sectors are outperforming the index, the fifth is basically flat, and half of the index components are beating the average; this is a remarkably healthy state for a bull market.
How is this possible? Because capital distribution is more even than before and the market participation structure has changed, which is why Tom Lee and others say the market has a self-healing ability that can squeeze out "uncomfortable" bubbles without flipping the whole table. Just think: the fastest momentum stock crash in history combined with a hedge fund blowout, and the market hit a new high within three days—something unimaginable five years ago.
Hearing this, you might think, "What are we waiting for? Should I just go all in?" Don't be so fast; the next part is the most valuable part of the interview, where the host asked a particularly sharp question: "Tom, you've consistently said there would be a decent correction this year; do you think it has already happened?" Tom Lee's answer was just two words: "Not yet." He said, we've experienced the " Magnificent Seven" falling, software stocks falling, crypto falling, and A-shares recently collapsing, too.
This is what you call a rotational bear market, where every sector takes a turn getting hit, but there has never been a single, comprehensive risk release covering the entire market. He believes the real major correction is still ahead, likely later this year, and the trigger for it is something he calls by a very vivid name: "inflation delusion.
" What does that mean? It means the market is scaring itself. Even though the underlying inflation data isn't that hot, the market keeps obsessing over the Fed hiking rates, worrying about a September rate hike, until it eventually scares itself into a 10% correction. Note that this isn't being bearish; this is rhythm management.
He is bullish on the direction, but he knows there will inevitably be bumps along the way. Next, let's put the whole puzzle together. The complete logic behind Tom Lee's judgment is that earnings are the engine of the bull market. AI is turning from a story into a cash cow, with profits spreading across the whole market, driving a global rally.
Therefore, the long-term trend is upward, and 8,000 points is the next stop. As for the downside, the biggest risk isn't earnings, but the Fed, the wavering inflation narrative, and potential shifts in the new chair's communication style, which could trigger a correction that makes you question everything at any time.
So, he provides two conclusions that seem contradictory but are actually unified: the market will rise, but on the way up , there will surely be a major shock. What does this mean for us ordinary investors? First, I believe you shouldn't be scared off by a single-day crash. Be bold. The collapse two weeks ago was the best.
A teaching case: a crash when the fundamentals haven't changed is often just free money, so don't let these new highs go to your head. Before the September meeting concludes, it's best to keep some ammunition on hand, because when " inflation delusion" flares up, it shows no mercy. Watch more videos and click the link below to join our channel membership. See you in the next one, OK .
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