Tom Lee Is Bullish on Stocks, But Braced for a Margin Debt Drop

Fundstrat’s Tom Lee reiterated his call for the S&P 500 to reach 8,000 by the end of August. He also repeated his warning that stocks are due for a pullback.

Speaking on CNBC, Lee joined Robinhood’s Stephanie Guild and Payne Capital’s Courtney Garcia. He said both views can hold at the same time.

A Bull Case Built on Earnings

Lee based his target on rising 2027 earnings estimates. He put the current figure near $410 per share, up from about $395 at the start of earnings season. Lee said the estimate could reach $425 by the end of the month.

Applying a price to earnings multiple of 20 to that figure would put the index close to 9,000, Lee said.

Courtney Garcia pointed to a broader trend supporting the rally. She noted that healthcare, financials, and industrials have all outperformed the S&P 500 over the past three months.

That breadth matters because the gains no longer depend on a handful of large technology names. Garcia added that the rally can continue if earnings and consumer spending keep holding up.

Four Risks Lee Is Watching

Lee named specific reasons a 10% pullback could still hit once the market reaches his 8,000 target. He pointed to record margin debt levels and an unresolved reaction to Fed Chair Kevin Warsh’s new inflation framework. He also flagged midterm election uncertainty and further stock unlocks at SpaceX.

That SpaceX concern comes even as SpaceX short interest has already dropped since its own lockup expired earlier this month.

“I think pullbacks occur when we’re least expecting it, you know, and usually when investors are bullish.”

Lee made a similar S&P 500 call earlier this month. He first flagged the same 8,000 target in early August, alongside a separate call on Ethereum.

He compared the current setup to 1998, when stocks kept climbing after the Long-Term Capital Management collapse. That rally lasted another 18 months and added 35%, he said.

Valuations have cooled by two full turns since March, even as earnings growth more than doubled. Lee called that combination a sign of healthy skepticism rather than exhaustion.