Tom Lee Expects Stronger Performance for US Stocks in July
Tom Lee, Chairman of BitMine, stated in an interview with CNBC that US stocks are expected to perform stronger in July due to current valuations being more reasonable than before, and investor sentiment not being overly bullish.
July marks the beginning of the second quarter earnings season, with first quarter corporate earnings significantly exceeding expectations. Currently, the market's price-to-earnings ratio is about 1.1 percentage points lower than in January. He anticipates that second quarter earnings will continue to exceed expectations, further lowering valuations and leaving room for P/E expansion.
Regarding the S&P 500 reaching 8000 points within the year, Tom Lee believes it is achievable. This target corresponds to an estimated earnings per share of about $400 in 2026 and a P/E ratio of 20 times. However, he thinks the earnings expectations are too low, and the P/E ratio could exceed 22 times, with potential upside to 8400-8800 points by year-end.
Source: Public Information
ABAB AI Insight
Tom Lee, as the founder of Fundstrat and Chairman of BitMine, is known for his optimistic macro forecasts and has accurately captured opportunities in the US stock bull market multiple times, including the post-pandemic recovery and AI-driven cycles.
In terms of capital flow, institutional funds are rebalancing by buying growth stocks on dips during the earnings season, motivated by the dual drivers of current valuation recovery and earnings upgrades. Fund managers are increasing purchases to catch up with benchmarks, strategically reinforcing the position of US stocks as a core global risk asset.
Similar to the valuation expansion driving new highs under the AI theme from 2023 to 2025, the current market is transitioning from a high valuation correction at the beginning of the year to earnings-driven expansion.
Essentially, this is a concentration of capital: high-quality companies are solidifying their pricing power through consistently exceeding earnings expectations, attracting both passive and active fund inflows, creating a structurally bullish market dominated by a few leading firms. The mechanism is driven by adjustments in the Federal Reserve's policy framework and the overlap of the technology capital expenditure cycle, directing funds towards high ROE assets rather than broad-based dispersion.
ABAB News · Law of Cognition
Companies exceeding earnings expectations expand their pricing power, and valuation recovery serves as an entry signal.
When fund managers lag, buying on dips becomes a necessity to catch up with benchmarks.
Bear market sentiments often serve as a continuation of bull markets, with emotional lows nurturing new highs.