Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) has raised its year-end target for the S&P 500 to 6,500 for 2025, suggesting a 10% gain from current levels.
This projection aligns with Morgan Stanley (NYSE:MS)’s recent forecast of 6,500 for the same period but is short of BMO Capital Markets (NYSE:BMO)’ target of 6,700.
David Kostin, the firm’s chief US equity strategist, made the call on Monday night. His previous 12-month S&P 500 target was 6,300.
“In our baseline macro outlook, the economy and earnings continue to grow and bond yields remain around current levels,” Kostin wrote in a note.
"But event risk remains high heading into 2025, including from the potential threat of an across-the-board tariff and the potential risk from even higher bond yields."
Despite these risks, Kostin wrote that he remains confident that the S&P 500 will experience broad-based growth, even if the standout tech stocks of the "Magnificent Seven" do not maintain their current level of dominance.
His analysis shows Apple Inc (NASDAQ:AAPL, ETR:APC), Alphabet Inc (NASDAQ:GOOG), Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB), Tesla Inc (NASDAQ:TSLA) and NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) have outperformed the other 493 stocks in the index by 63 percentage points in 2023 and 22 points so far in 2024.
"The narrowing differential in earnings growth rates should correspond with a narrowing in relative equity returns," Kostin wrote.
"Although the 'micro' earnings growth story supports continued ‘Magnificent 7’ outperformance, more 'macro' factors such as economic growth and trade policy lean in favor of the S&P 493."