Fundstrat co-founder and managing partner Tom Lee says the broader stock market could face several key challenges in the coming months, even as he remains optimistic about the long-term prospects for artificial intelligence (AI) and technology stocks.
In a new CNBC interview, Lee says say Investors are likely to focus on how the Federal Reserve responds to inflation risks, rising rates and a wave of upcoming initial public offerings (IPOs).
“I think there are three tests coming for the stock market. One of them, of course, is how the Fed is going to respond to both underlying inflation risks. The second is that the market doesn’t really like it when inflation is a problem and interest rates are rising, and I think we’re seeing that in the PPI right now.
I think there is a lot of inflation in the pipeline, not structural, but just an inflation shock, but also an energy shortage. And the third, of course, is, you know, I think we have a lot of IPOs and that’s a lot of supply.
So I think we’ll have some testing later this summer. So I think the risk reward is still big for tech, but I’m not sure about the broader market.”
Lee said he remains optimistic about technology in the long term because of the United States’ leadership in AI, but warned that concerns about inflation, rising interest rates and increased market supply from initial public offerings could put pressure on the broader stock market in coming months.
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