Warren Buffett Says Buy This S&P 500 Index Fund -- It Could Soar 156% by 2030, According to a Top Wall Street Analyst

Warren Buffett has served as the CEO of the Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) holding company since 1965. He will step down from the role at the end of this year, capping off a spectacular run of success.

Had you invested $1,000 in Berkshire stock when Buffett took the helm, it would have been worth $44.7 million at the end of 2024 thanks mostly to his incredible stock-picking ability. But he's a full-time professional, and he knows the average investor doesn't have the expertise to produce the same returns.

Therefore, rather than buying individual stocks, Buffett has often encouraged investors to buy low-cost exchange-traded funds (ETFs) that track indexes like the S&P 500 (^GSPC -0.67%). The Vanguard S&P 500 ETF (VOO -0.57%) is one of the cheapest options, and he has specifically recommended it in the past.

According to Tom Lee from Fundstrat Global Advisors, who has made some very accurate market predictions over the last couple of years, the S&P 500 could soar 156% by 2030.

Image source: The Motley Fool.

The ideal index fund for beginners and seasoned investors alike

The S&P 500 is highly diversified, featuring 500 companies from 11 different sectors of the economy. The index has a very strict entry criteria that ensures only the highest quality companies make the cut. Each member must have a market capitalization of at least $20.5 billion, and it must be profitable over the most recent four quarters.

But even if a company ticks every box, it still has to be selected for inclusion by a special committee that meets once per quarter to rebalance the index.

Buying the Vanguard S&P 500 ETF is one of the cheapest ways for investors to track the index. It features an ultra-low expense ratio of just 0.03%, meaning every $10,000 invested would incur fees of just $3 per year. According to Vanguard, the average expense ratio of competing funds is 25 times higher at 0.75%, which can detract from investors' returns over the long run.

Although the S&P 500 is highly diversified, it's quite top-heavy because it's weighted by market capitalization. In other words, the largest companies in the index have a greater influence over its performance than the smallest.

The top 10 holdings in the Vanguard ETF account for 35.5% of the total value of its portfolio, led by its top three holdings, which have a combined market cap of $9.6 trillion on their own. All three of them are in the same sector: information technology.

Data source: Vanguard. Portfolio Weightings are accurate as of April 30, 2025, and are subject to change.

Apple, Microsoft, and Nvidia, along with Amazon, Alphabet, and Meta, are six of the biggest names in artificial intelligence (AI) right now, which could be the most valuable financial opportunity those companies have ever seen. Bloomberg thinks generative AI will be a $1.3 trillion market by 2032, but even that figure might be conservative since Microsoft, Amazon, Alphabet, and Meta alone are forecast to spend $329 billion on AI data center infrastructure just this year.

Goldman Sachs is a little more bullish, predicting AI will add $7 trillion to the global economy by around 2033. PwC places that number at $15.7 trillion by 2030, whereas Cathie Wood's ARK Investment Management thinks it will improve labor productivity by $200 trillion over the same period.

No matter which estimate proves to be correct, AI could be a big driver of S&P 500 returns from here, and it's one of the reasons Tom Lee thinks the index is poised to more than double by the end of this decade.

Image source: Getty Images.

Tom Lee predicts 156% upside by 2030

Investors shouldn't hang their hats on the forecasts of any single Wall Street analyst, because they don't always get things right. But Tom Lee has earned a reputation for some incredibly accurate S&P 500 calls over the past couple of years.

He predicted the S&P would rise to 4,750 during 2023, while most other analysts were more pessimistic due to the ongoing bear market, and it wound up reaching 4,769. The index then hit four out of his five price targets during 2024 (5,200, 5,500, 5,700, and 6,000), falling just short of his final prediction of 6,300.

This year, Lee was one of the only analysts to predict the S&P would stage a V-shaped recovery after its 19% sell-off that was triggered by President Donald Trump's tariffs. The index hasn't reclaimed its all-time high yet, but it's now above where it was on April 2, which is the date Trump announced the disruptive trade policies.

But Tom Lee isn't solely focused on the short term, because he also issued a forecast suggesting the S&P 500 could reach 15,000 by 2030. If he's right, investors who buy the Vanguard S&P 500 ETF could earn a 156% return between now and then.

Lee thinks companies will pour trillions of dollars into AI and automation to offset shortages in the workforce, which will be an upside catalyst for many of the largest companies in the S&P. And he thinks the index will benefit from demographic tailwinds. Millennials and many Gen Zers will be in their highest earning years by 2030 (typically between ages 30 to 50), which is when people make big life decisions like investing. This could result in a wave of fresh money flowing into the S&P 500.

History proves the S&P always climbs to new highs given enough time, so eventually reaching 15,000 seems inevitable. Whether it gets there by 2030 will depend on the performance of corporate earnings and the economy, so any unexpected shocks (like another pandemic or financial crisis) could add years to Lee's target.

But even if it doesn't reach 15,000 by 2030, the index is likely to be much higher than it is today, so taking Buffett's advice and buying the Vanguard S&P 500 ETF might be a smart move.