Tom Lee: US Stocks Have More Room to Run Before Year-End — But IPO Supply and Seasonal Risks Loom
Fundstrat chairman Tom Lee struck a constructive but nuanced tone on US equities in a CNBC interview on May 24, arguing that the stock market's fundamental picture remains healthy despite rising oil prices and bond yields — while flagging a set of specific risks that could create pressure in the second half of 2026.
The bull case: healthy fundamentals and AI dominance
Lee argued that the US economy possesses structural advantages that distinguish it from other major economies and support continued equity market strength. He cited the US's dominant position in artificial intelligence technology, relative energy independence compared to Europe and Asia, and strong consumer resilience as the three pillars of his constructive view.
"Compared to the beginning of the year, US stocks still have greater upside potential before the end of the year," Lee said. "We have some issues to digest later this year, but currently the fundamentals are healthy and supported by earnings."
The earnings backdrop Lee referenced has been one of the most consistent surprises of the current cycle. Mega-cap technology companies have repeatedly beaten revenue and profit expectations despite macro headwinds — a dynamic that has helped the Nasdaq recover strongly from April's lows even as Bitcoin and other risk assets have struggled.
AI IPOs: trillions in wealth creation, with a supply caveat
Lee identified the upcoming IPOs of major AI companies — specifically OpenAI and SpaceX — as a significant catalyst for wealth creation and market stimulation in the second half of 2026. OpenAI raised $122 billion at an $850 billion valuation in late March and is racing toward a public listing. SpaceX, which merged with xAI in February and was valued at $1.25 trillion, confidentially filed its IPO prospectus in April.
Lee argued that these listings will generate trillions of dollars in new wealth for founders, early investors, and employees — capital that will subsequently flow into consumption and broader market activity, providing a meaningful economic and market stimulus.
However, Lee also flagged the flip side of large-scale IPOs: share supply pressure. As post-IPO lock-up periods expire and early investors gain the ability to sell, the market will face an increase in available stock supply — a technical headwind that can weigh on prices even in a fundamentally healthy environment. Lee warned this dynamic could create meaningful pressure later in the year as SpaceX and OpenAI shares begin unlocking.
AI and semiconductors: not a bubble
On the question of whether AI and semiconductor stocks have entered bubble territory — a concern that has grown as the Nasdaq's AI-driven rally has pushed valuations to elevated levels — Lee was direct in his dismissal. The market is chasing genuinely scarce assets, he argued, not fictional narratives.
"Demand for AI-related products remains strong, while supply remains insufficient," Lee said. The supply constraint on AI infrastructure — compute, chips, data center capacity, and specialized talent — means that the companies building that infrastructure are not being overvalued on speculative future earnings but on real and growing current demand that supply cannot yet match. In Lee's framework, that is the opposite of a bubble condition.
The risks Lee is watching: midterms, oil, and IPO unlocks
Despite his overall constructive stance, Lee laid out three specific risks for the second half of 2026. Seasonal uncertainty from the midterm elections — which historically create market volatility as investors reprice political risk and potential policy shifts. A liquidation period tied to oil product inventory shortages — consistent with the broader energy market disruption the Iran conflict has created. And the share supply pressure from SpaceX and OpenAI IPO lock-up expirations noted above.
Lee also clarified his earlier prediction of a stock market correction, explaining that the bear markets he anticipated have already occurred in specific segments. "We've already experienced bear markets in the MAG-7 and software sectors, and other stocks will experience bear markets later this year, but the MAG-7 and software sectors will be spared this time," he said — framing the coming correction as a rotation into previously untouched areas of the market rather than a broad-based decline.
What it means for Bitcoin and crypto
Lee's constructive equity view has direct implications for crypto markets given the strengthening correlation between Bitcoin and the Nasdaq that has developed through 2026. If US stocks continue grinding higher into year-end as Lee projects — supported by AI earnings strength and IPO-driven wealth creation — the risk-on backdrop that has historically supported Bitcoin outperformance becomes more durable.
The caveat is timing. Lee's identified risks — midterm uncertainty, oil inventory disruptions, and IPO supply pressure — are all second-half 2026 phenomena. The near-term picture remains dominated by the inflation data, Fed rate expectations, and geopolitical developments that have driven Bitcoin's retreat from $83,000 to $74,000 to $76,000 over the past two weeks. Lee's year-end optimism provides a longer-term framework but does not resolve the immediate macro headwinds Bitcoin faces heading into June.
