Tom Lee: Market is rising for all the right reasons

Tom Lee argues the market rally is justified by abating tail risks, strong earnings (driven by revenue and margins, AI payoffs), and leadership from Mag-7/tech. He dismisses narrow breadth concerns, framing it as rolling bear markets where tech leads, followed by breadth. Lee expects retail to drive further gains, broadening the rally into small caps, with a base case for S&P 500 at 7300. Top picks: IGV, Mag-7, crypto.

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Tom Lee: Market is rising for all the right reasons

ndx

The leadership is coming from the groups that we want to see, which has been the Mag-7 and the tech... we still think we're going to make a good move towards 7300 for the S&P 500.

4/28/2026 12:59:26 AM	medium term up	20 days later	+6.00%	+6.00%
4/9/2026 12:21:52 AM	medium term up	20 days later	+9.30%	+9.30%
1/21/2026 11:11:31 PM	medium term cautious down	20 days later	-1.24%	+0.62%
11/14/2025 11:23:51 PM	medium term cautious up	21 days later	+3.34%	+1.67%
11/10/2025 10:53:49 PM	short term up	6 days later	-2.87%	-2.87%
10/6/2025 2:52:07 PM	medium term up	20 days later	+3.95%	+3.95%
9/15/2025 11:21:47 PM	medium term up	20 days later	+2.90%	+2.90%
8/22/2025 6:28:53 PM	short term up	8 days later	-0.83%	-0.83%
8/13/2025 3:51:26 PM	short term up	5 days later	-1.88%	-1.88%
8/4/2025 10:55:29 PM	short term sharp up	6 days later	+2.21%	+3.31%
8/4/2025 4:19:52 PM	short term up	6 days later	+2.21%	+2.21%

Show all ndx results

rut

I think it's going to be a retail driven buying of stock and that's why I think breadth can take place because there's retail investors do like small-cap stocks as well.

1/23/2026 10:40:25 PM	long term up	60 days later	-7.89%	-7.89%
1/5/2026 2:03:32 PM	medium term up	20 days later	+2.97%	+2.97%

The market has rallied strongly, and the host asks Tom Lee what to do now, noting the remarkable earnings growth of 28% in April.

Scott
Tom Lee

The market is rising for the right reasons: tail risks are abating, fundamentals are strong with earnings estimates rising, and leadership is coming from Mag-7, tech, and cyclicals, indicating economic resilience. Base case is S&P 500 moving towards 7300. Raised software (ETF IGV) to top pick alongside Mag-7 and crypto.

Earnings growth is strong because revenue growth is delivering upside, and there is a margin story at work showing productivity gains. AI is having positive payoffs for the economy and earnings.
The host questions the narrow breadth of the rally, noting the Nasdaq is up 15% in one month, and Goldman Sachs warns that sharply narrowing breadth historically indicates drawdown risk. The median S&P constituent is 13% below its high.

Scott
Tom Lee

This is a series of rolling bear markets. Mag-7 and software peaked earlier, bottomed first, and are now rallying. Breadth should follow tech leadership, which is textbook behavior.

Tech peaked several months before the index level market peaked, so the current rally is a natural progression.
The host asks where the market is going, given the rapid rally from the March low, and whether it has stolen future gains.

Scott
Tom Lee

Strong markets tend to stay strong. Institutional investors caught the bottom, but retail missed the low and has a lot of firepower. Expect retail-driven buying, which will broaden the market, especially into small-cap stocks.

Retail investors like small-cap stocks, so breadth can take place as they deploy capital.

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