Tom Lee: Three major factors boost the year-end market, AI will lead next year's market

Tom Lee, Chairman of BitMine, stated in a recent interview that although the market has been extremely volatile over the past six weeks, with many fund managers describing it as one of the most painful periods of their careers, there are three key factors that could drive the stock market to strengthen by the end of the year. He also mentioned that the true focus of the market is not on Crypto Assets, but rather on AI. This super trend will continue to influence the overall direction of the stock market in the coming year.

The seasonal strengthening point has arrived, and the probability of year-end market performance has significantly increased.

Tom Lee believes that there are three factors that will boost the market by the end of the year. First, the seasonal effect is strengthening. He believes that after mid-October, the market usually enters the most significant rising phase of the year. Looking back at history, the ratio of market gains during this period is about 50% to 60%, and in those years that successfully rebounded, the increase by the end of the year often falls around 5%.

This year's trend clearly aligns with this pattern, as a strong reversal has already occurred in mid-October. Therefore, he stated that the market is currently in a phase where seasonal effects can exert their greatest influence.

The Fed's atmosphere has turned dovish, and the shadow Fed's attitude is more critical than Powell's.

The second boost is the Federal Reserve's ( Fed) doveish policy stance. Tom Lee stated that although Fed Chairman Powell occasionally makes hawkish remarks, the overall atmosphere at the decision-making level is gradually shifting towards easing.

He mentioned that even though Powell himself is relatively conservative, there is actually a more dovish “shadow Fed” behind him, which is making the market gradually feel that the direction of monetary policy is becoming less tight. Additionally, with a new Fed chair coming in 2026, the expectations for interest rate cuts have become even stronger. For the year-end market, such a policy environment provides additional momentum.

Eighty percent of the funds are underperforming, and they will be forced to rebalance their positions by the end of the year.

The third driving force is the strong buying pressure from the fund's “forced buyback.” Tom Lee cited market statistics indicating that currently about 80% of active funds are trailing major indices, and their holdings are relatively low.

Once the market begins to rebound, these funds will inevitably need to chase prices and increase their positions in order not to fall behind. This performance pressure-driven buying will concentrate and emerge, becoming a direct and strong supporting force to drive the year-end market.

AI will become the leading player in the next wave, expected to strengthen overall in the coming year.

Tom Lee finally emphasized that although the market once focused on whether Crypto Assets could drive risk sentiment, what truly influences the core of the market right now is AI.

He defines AI as a major trend across industries, as evidenced by the investment of funds, corporate layouts, and even the tight supply and demand for electricity and chips, all of which indicate that AI has a sustained strong momentum on the demand side.

He also cited historical data indicating that the most expensive batch of stocks in the market in 2015 remained the best-performing group five years later, meaning that high valuations do not prevent real long-term trends. He believes that in the next 12 months, AI-related stocks will not be driven by a few companies alone, but there is a chance that all of them will move together.

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This article Tom Lee: Three major forces to boost the year-end market, AI will lead the market next year first appeared on Chain News ABMedia.