Fundstrat
Fundstrat's Tom Lee: Why the Bull Market Isn’t Over Yet | 2025 Market Outlook
10/22/2025, 7:31:21 PM
Economic Summary
- The bond market is pricing multiple Fed cuts this cycle; easing would lower yields and likely push mortgage rates down roughly 70 basis points, potentially bringing mortgage rates toward the mid-5% range next year.
- The ISM manufacturing index has been below 50 for an extended period (48.7), which historically corresponds to mid/early cycle conditions rather than a terminal late cycle, a constructive signal for equities.
- Household fundamentals are supportive: roughly 15 million household formations in the last decade vs. ~13.5 million homes built, implying a structural housing shortage that should support housing demand and related sectors.
- The market endured six severe shocks in five years yet corporate profits and stock prices recovered; equal-weight S&P P/E sits near 17x, lower than pre-shock levels, suggesting cheaper valuations given resilience.
- AI is an outsized economic driver — IDC forecasts ~$1.3 trillion IT spending around AI by 2029 — and NVIDIA (NVDA) is positioned as a critical, scarce supplier for large language model infrastructure.
- Blockchain/tokenization (stablecoins, tokenized securities, tokenized real estate) could materially expand digital-asset markets (Treasury estimate for stablecoins cited) and improve Wall Street productivity and margins, enabling new revenue streams.
Bullish
- Fed easing is priced in by bonds and should lower borrowing costs, boosting liquidity.
- AI spending surge (IDC $1.3T by 2029) benefits dominant chip suppliers like NVDA.
- Housing shortage from underbuilding vs. household formation supports housing demand and mortgage activity.
- Blockchain and tokenization could materially raise Wall Street margins (benefiting GS, JPM).
- Market survived six major shocks, leaving valuations cheaper and demonstrating resilience.
- Household balance sheets and corporate profits remain strong, supporting consumption and earnings.
Bearish
- AI hype could be a bubble, prompting sharp re-rates for related stocks.
- Political polarization and skewed sentiment are keeping many investors sidelined.
- Manufacturing ISM below 50 signals weak manufacturing, a potential growth headwind.
- Seasonal September risks and uncertainty about Fed timing could pressure stocks.
Bullish tickers
NVDABTCETHGSJPMVMABACCOSTWMTNDAQ
NVDA
1 price targets
300
Bullish
Dominant supplier of AI chips required for large language models; key beneficiary of massive AI IT spend.
Bearish
Viewed by some as expensive and vulnerable if AI enthusiasm fades; bubble concerns exist.
BTC
Bullish
Presented as digital gold and a potential store-of-value within tokenized financial markets.
Bearish
Speculative asset with regulatory and adoption risks.
ETH
Bullish
Seen as the primary smart-contract platform where Wall Street will build tokenized markets and digital assets.
Bearish
Concentration and regulatory risks as the primary platform for tokenized assets.
GS
Bullish
Blockchain and tokenization could raise margins and make Wall Street banks less cyclical and more tech-like.
Bearish
Banks face execution risk and a timeline to realize blockchain-driven productivity gains.
JPM
Bullish
Well-positioned to benefit from tokenization and improved transaction efficiencies on blockchain.
Bearish
Reliance on legacy businesses could slow realization of blockchain benefits.
V
Bullish
Could profit from increased digital transactions and tokenized payment flows.
Bearish
Payment networks may face competitive or regulatory pressures amid crypto/tokenization shifts.
MA
Bullish
Likely to benefit from higher digital transaction volumes and tokenized commerce.
Bearish
Transition risks as payment rails evolve with tokenization.
BAC
Bullish
Could see margin expansion as banking services migrate onto more efficient blockchain infrastructure.
Bearish
Traditional banks could be slow to adopt blockchain, delaying margin improvement.
COST
Bullish
Used as a valuation comparator to argue NVDA appears inexpensive given NVDA's scarcity.
Bearish
High valuation (mentioned 49x) could be challenged by retail cycles.
WMT
Bullish
Large, steady retailer used as a valuation reference point versus high-growth tech names.
Bearish
Valuation (mentioned 39x) could face pressure from retail competition and margin dynamics.
NDAQ
Bullish
Exchange role in approving/tokenizing securities positions Nasdaq to be central in tokenized markets.
Bearish
Tokenization initiatives face regulatory and operational hurdles that could slow adoption.
People mentioned
Tireless KenMark NewtonSean FarrellBessonDonald Trump