Veteran market strategist Tom Lee signaled that the US stock market may be approaching a pivotal turning point, with the S&P 500 potentially climbing toward 7,300. Speaking on CNBC, Lee outlined a cautiously optimistic scenario as risk-off positioning eases and earnings remain strong.

Lee identified three trades that could define the next rally: rotation back into the MAG 7 mega-cap tech stocks, a potential bottom in the software sector (IGV), and crypto assets. According to Lee, institutional data show software ownership at multi-decade lows while MAG 7 stocks are cheaper relative to AI leaders than at any point in the past decade.

Despite recent volatility, Lee emphasized that underlying fundamentals remain solid, supported by broad double-digit earnings growth. He noted that crypto drawdowns have already reached about 80% of previous winter levels, setting up high-probability trade opportunities. The strategist cautioned that Nvidia's upcoming earnings report will be critical for AI infrastructure trades and could either reinforce or dampen market optimism. Lee believes broader market breadth and overlooked sectors could lead the next leg higher, suggesting the current environment requires careful attention to positioning, earnings, and sector rotations.