Renowned for his consistently bullish equity predictions, Fundstrat’s Tom Lee suggests that certain categories of stocks may face a bear market later this year.
In a recent CNBC interview, Lee points out that parts of the stock market appear vulnerable due to “midterm seasonality,” petroleum shortages, and a wave of upcoming initial public offerings (IPOs) that could lead to a supply overhang.
Despite this, the Wall Street veteran believes that certain prominent sectors will be spared from the impending bear market.
“I think there’s going to be a bear market in other stocks later this year, yes, but I think it’s going to spare the Mag-7 and software.
So it’s going to be names that either reached high valuations or will be impacted by the influx of new stock later this year, or companies affected by the shortage of petroleum products. So, there are indications that we may face headwinds later this year.”
Lee also warns that semiconductor stocks “could potentially form a bubble.”
“They don’t seem like a bubble to me yet. Even with Nvidia trading at 19 times earnings, I still see a favorable risk/reward ratio, but certain parts of that ecosystem have become quite expensive.”
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