Fundstrat
Fundstrat's Tom Lee: Retail Investors Are Still Powering This Bull Market
10/9/2025, 9:47:39 PM
Economic Summary
- The government shutdown is reducing visibility into official economic data, leaving markets to rely on private indicators and firm-level signals.
- AI-led investment and productivity gains are strengthening corporate earnings prospects, supporting equity demand especially in tech (e.g., NVDA, MSFT).
- Retail investors have been net buyers since April, and institutional allocations are increasing in Q4, providing supportive flows for stocks.
- Large cash balances in money markets (~$7 trillion) create a tailwind for markets as some of that liquidity could rotate into equities.
- Credit spreads are very tight (tightest since 1998), indicating low perceived credit risk and supporting risk asset rallies.
- Services and consumer spending remain resilient (services >50 in ISM), and consumption (~70% of the economy) underpins growth even if manufacturing lags.
- Missing weekly jobless claims and mixed private surveys (e.g., Carlyle/Moody's regional recession flags) create ambiguity on labor markets and near-term risk.
Bullish
- AI is driving stronger ROI, demand, and profit creation across companies.
- Retail and institutional flows are accelerating into stocks, supporting near-term momentum.
- Large amounts of cash on the sidelines ($7 trillion) could fuel further equity inflows.
- Data-center and related infrastructure spending (power, utilities, industrials) supports tech capex.
- Fed expected to begin a cutting cycle, which should support earnings and valuations.
Bearish
- Government shutdown is creating data blind spots and uncertainty for economic readings.
- Moody's analysis claims ~22 states are in or near recession, signaling regional weakness.
- Surveys (e.g., Carlyle) and some labor indicators suggest the labor market may be weaker.
- Concerns about an AI-driven concentration and a possible AI bubble if ROI disappoints.
- Missing weekly jobless claims complicates timely labor-market analysis and increases risk.
Bullish tickers
NVDAMSFTPLTRAAPLJPM
Bearish tickers
NVDAPLTRAAPL
NVDA
Bullish
Seen as core AI leader; lower forward PE relative to some staples and central to earnings upside from AI adoption.
Bearish
Exposure to a concentrated AI valuation theme could suffer if AI ROI or demand disappoints; bubble concerns exist.
MSFT
Bullish
Microsoft forecasts a multi-year data-center crunch, supporting sustained cloud and infrastructure spending.
Bearish
Potential for data-center overbuild on longer horizon could pressure some hardware-related vendors.
PLTR
Bullish
Highlighted as one of the big-performing names over the bull run, benefiting from AI/security data demand.
Bearish
High past gains imply elevated expectations and vulnerability to any AI/contracting spending disappointments.
AAPL
Bullish
Listed among top performers in the multi-year rally and benefits from broader tech-led market leadership.
Bearish
As a large-cap leader, AAPL could face mean-reversion if sentiment toward tech softens.
JPM
Bullish
JP Morgan data shows strong retail stock purchases, indicating continued retail participation supporting equities.
Bearish
Retail flow data may reverse and reduce a key source of recent market support.
WMT
Bullish
Referenced as a high-PE comparison point highlighting valuation context versus tech names like NVDA.
Bearish
Higher forward valuations relative to some tech names could imply limited upside from current levels.
COST
Bullish
Mentioned as another high-PE retail/consumer name used to compare tech valuations.
Bearish
Elevated forward PE suggests the stock may be less attractive if growth slows.
People mentioned
ScottTom LeeKeith LernerStephanie LinkDom ChuMichael Dell