Stock Market Outlook: 4 Charts Show Fundstrat Predicts S&P 500 to Triple

• Fundstrat's Tom Lee expects the S&P 500 to surpass 15,000 by 2030.
• Demographic trends, millennial consumption habits and technological advancements will be the main drivers.
• Here are four charts that show why Lee is so bullish on the stock market.

Fundstrat's Tom Lee raised eyebrows last month when he made a wildly optimistic prediction: The S&P 500 will nearly triple by 2030.

In an interview with Bloomberg's Odd Lots, Lee said he expects the S&P 500 to top 15,000 by the end of the decade. The index was trading around 5,630 on Friday.

“If this is a normal S&P cycle that follows demographics, the S&P should potentially hit 15,000 by the end of the decade. My guess is that as we move out into a longer time horizon, that's probably where I think we're headed,” Lee said.

In the interview, Lee said he looked at a handful of charts that support his long-term bullish prediction.

Here are the four charts Lee shared with Business Insider that show why the already bullish forecaster is so bullish on the stock market.

1. Thanks to Generation Y

Lee made the above chart several years ago, but his thesis remains the same. The average age of millennials today is about 31, and the global cohort of 2.5 billion people is starting to enter their prime, between the ages of 30 and 50.

“This would be the third time that stocks have entered a cycle where annual returns are close to 15%. There was the Roaring Twenties, then the '50s and '60s, and this is a third cycle,” Lee told CNBC last month.

“This has all coincided with an increase in the number of people aged 30 to 50, in other words the number of mature adults, and this time it is millennials and Gen Z who are driving this increase.”

“It's a demand issue. When you hit your prime years, between 30 and 50, the Urban Institute shows you start borrowing more money, you make big life decisions, that's what drives the economy.”

2. Stock market peaks and demographics

The stock market tends to peak around the same time the population reaches its peak age, around age 50, because people are closer to retirement and often spending less money.

For example, when the most prosperous generation reached its peak in 1930, it coincided with a multi-year bear market in the stock market.

Fast forward to 1974, when the Silent Generation reached its peak. This happened around the same time as a painful stock market correction of about 35% that lasted for years.

The peak of the baby boomer population in prime age occurred in 1999, just a year before a multi-year bear market hit stocks.

The average millennial isn't expected to reach their prime age until 2038, suggesting significant upside potential for the stock market between now and then, Lee said.

3. Technology will address the global labor shortage

Lee says technology spending will explode in the coming years as the world faces a growing labor shortage.

“We have a really huge opportunity for American technology companies because of AI, which is providing the global digital workforce, because there is a global labor shortage. So those two forces combine to, I think, generate almost a decade of extraordinary stock market returns,” Lee said.

“I think a lot of money is going to be spent on American technology products because the world is going to be short 80 million workers by the end of this decade, which is about $3 trillion in wages that are turning into silicon, which means that American silicon and AI suppliers are going to have $3 trillion in revenue.”

4. Money will flow into US tech stocks

As more companies spend trillions of dollars on technology to address a global labor shortage, the tech sector will make up 50% of the S&P 500.

The information technology sector currently represents about 30% of the index.

“If American companies grow their profits at this rate, the price-to-earnings ratio in the United States should increase. There will be capital flows into the United States. Where else in the world are the best and largest technology companies? They are all essentially in America,” Lee said.