Tom Lee: Upside case for stocks the rest of this year is strengthening

Tom Lee argues the upside case for stocks is strengthening, with S&P 500 above 7700 probable. Key drivers: resilient economy post-Iran war, rising earnings estimates, AI productivity gains, and potential resolution of Middle East tensions lowering oil risk premium. He recommends a diversified portfolio with 25% each in stocks, bonds, gold/crypto, and commodities, noting gold's strong performance and the software ETF (IGV) rebound as evidence private credit risks are manageable.

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NDX up , medium term, interviewee explicit

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Oil volatile , short term, interviewee implicit

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Metals up , medium term, interviewee explicit

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Tom Lee: Upside case for stocks the rest of this year is strengthening

metals

Gold's been a really good total return performer, and so I think gold should sit in portfolios.

2/12/2026 2:20:41 AM	medium term sharp up	20 days later	+2.56%	+3.84%
2/2/2026 6:15:00 PM	short term up	6 days later	+1.02%	+1.02%
1/26/2026 10:43:44 PM	short term sharp up	6 days later	-18.04%	-27.06%
1/5/2026 2:03:32 PM	medium term up	20 days later	+20.04%	+20.04%

ndx

I think for stocks for the year, the upside case is strengthening, I think S&P above 7700 is very probable.

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%

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The market seems to be looking past the war in Iran and political events. What is the market most closely looking at right now?

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The market had three risks: Iran war escalation, private credit, and a new Fed chair. We've come out the other side of the Iran war with the economy showing remarkable strength; earnings estimates are going up. Private credit underwriting looks better than expected, as seen in the IGV software ETF rebounding from 72 to 85. For stocks, the upside case is strengthening; S&P above 7700 is very probable.

The software ETF (IGV) fell to 72 and is back to 85, indicating private credit loans tied to software are less of a structural problem.
What other planks feed into that upside case?

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Earnings estimates are higher, AI is delivering productivity, and risk premia could drop later this year if the Middle East issue is settled, removing the hostile oil premium. That allows markets to lift higher.

Torsten on CNBC discussed the positive case for AI including business growth and company formation.
Oil is still at $95, market in stasis. What are the two possible outcomes for markets vis-a-vis Iran? Best case and worst case.

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Worst case: extended war leads to oil price spike from inventory drawdown, putting global growth at risk. Best case: war resolved quickly through combined pressures. The market is betting on a shorter war.
Michael Hartnett recommends a 'sleep like a baby' portfolio: equal weight stocks, bonds, cash, and commodities. Is this a working allocation to stick with?

This four-way split is having its best year since 1933, outperforming the traditional 60/40.

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There's a lot of logic to that. Gold has been a good total return performer and should sit in portfolios along with crypto. NASDAQ and oil are good counter hedges, so a 25% allocation to each makes sense.

Technology and energy have historically alternated in performance, but both are doing well now.
Roger McNamee expressed concerns about AI models: OpenAI doesn't have revenue to justify its CapEx. Do you have concerns about the CapEx rainbow?

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It could play out several ways, but it's too early to worry. We are consuming every piece of compute.

There could be a breakthrough where power consumption drops, but current demand is high.

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