The S&P 500 will soar 175% to 15,000 by the end of the decade, Fundstrat's Tom Lee says (2024)

• Fundstrat's Tom Lee said the stock market could nearly triple by 2030 to reach 15,000.
• Millennials and a global labor shortage are the two thematic drivers behind his bullish projection.
• "The two previous instances of global labor shortage resulted in a parabolic move in technology stocks," Lee said.

The stock market could nearly triple by the end of the decade, according to Fundstrat's Tom Lee.

In a recent interview on Bloomberg's Odd Lots podcast, Lee made the case for the S&P 500 to trade about 175% higher from current levels to 15,000 by 2030.

"I think we try to look at a normalized situation, and in a normalized world, if this is a normal S&P cycle following demographics…S&P should be potentially 15,000 by the end of the decade. To me, as you move into a longer timeframe that's probably where I think we're moving towards," Lee said.

Backing up Lee's bullish projection is continued growth in earnings and the stock market's valuation multiple.

Lee broke down how he arrived at that projection in the interview.

"It's roughly a 20% annual price appreciation. Earnings growth would be 12% to 15% of that total, so then you have 5% a year PE expansion," Lee said, referring to the popular price-to-earnings valuation measure.

Whether that valuation multiple can grow at 5% a year seems like a lofty projection, but Lee said stocks deserve the premium valuation, especially after the COVID-19 pandemic.

"I think one thing to keep in mind is COVID proved to us that businesses are a lot more resilient than we realized, so why should we assign the same PE to them that we assigned to them prior to this knowing that if you shut down the global economy, jack up unemployment to 20%, have huge supply chain disruptions, and yet companies could manage earnings. I think they deserve a lot more credit, so I think the multiple can compound at a higher rate than 5%," Lee said.

Lee also highlighted two thematic factors that are poised to drive further upside in the stock market over the long-term: millennials and a global labor shortage.

"Part of our work relies on what we call thematic drivers. One is millennials. Since 2018 we've talked how millennials, which is the largest generation, are reshaping the economy, which they are mainly through fintech and changes in preference. But of course now coming is a big generational wealth transfer of you know as much as $80 trillion," Lee said.

"The second, of course, is that there is a huge global labor shortage which has started in 2015 and won't be resolved until 2035. And the two previous instances of global labor shortage resulted in a parabolic move in technology stocks," Lee said.

Lee's global labor shortage projection is based on global demographics, with prime-age workers not replacing older generations at a fast enough clip.

That means companies will turn to technology and automation to make up for the gap in prime-age workers, ultimately spending trillions of dollars on silicon-based technologies that can enable robotics and artificial intelligence.

Lee has consistently held a bullish view on the stock market, and he's been spot on.

At the start of June, he said the S&P 500 could trade to 5,500 by the end of the month. With one week left of the month, it's trading at about 5,485, just 15 points below his short-term target.