S&P 500 Could Hit 6,600 by 2025 Says Fundstrat’s Tom Lee

Fundstrat’s head of research, Tom Lee, has expressed his bullish outlook on the S&P 500, predicting that the index could reach as high as 6,600 points by the end of 2025. This optimistic forecast comes after the S&P 500 has weathered multiple significant shocks over the past five years, including the Covid pandemic, supply chain disruptions, inflationary pressures, rapid interest rate hikes by the Federal Reserve, and tariff impositions. Despite these challenges, the index has not only recovered but also set new all-time highs, currently trading at 6,198 points as of Monday’s close.

Lee attributes the market’s resilience to several factors. He notes that many investors who sold their holdings during the market’s early-year decline missed out on the subsequent strong rebound. According to Lee, the volatility index (VIX) falling below 30 after peaking above 60 indicates a decisive low in the market, suggesting that the worst is behind us. Additionally, Lee points out that the impact of tariffs has been less severe than anticipated, and underlying inflation, excluding tariffs, is lower than expected. This improved visibility and more favorable economic conditions have contributed to the market’s recovery.

Looking ahead, Lee believes there is significant upside potential for the S&P 500. He argues that the price-to-earnings (P/E) ratio of the market can increase substantially, given that the index has endured five major shocks over the past five years while earnings continued to grow. If the S&P 500 were a single stock, Lee suggests that its ability to withstand and recover from these shocks would warrant a much higher valuation multiple. This perspective underscores Lee’s confidence in the market’s ability to continue its upward trajectory, despite the challenges it has faced.