The 2025 Wall Street S&P 500 forecasts are rolling in, and so far, the outlook is all bullish. I haven’t found a single bearish forecast, which is somewhat worrisome. Most firms project the S&P 500 will close 2025 around 6,500—a solid 8.3% gain from the current ~6,000 level. If 2024 ends as expected, with the index up over 25%, it will have been a stellar two years for the market.
Being a Wall Street strategist might just be one of the best jobs around. The stakes for being wrong are virtually nonexistent. The process is straightforward: estimate S&P 500 earnings, apply a multiple, and voilà—a target price. Agree with the projected figure? Just craft a narrative to back it up.
Of course, strategists also hedge their bets by offering scenarios in which their forecasts might not pan out. This is a fair practice, considering the inherent uncertainties of investing in risk assets like stocks. There’s always the potential for unexpected events to derail even the most well-thought-out predictions.
Let’s dive into the 2025 S&P 500 targets released so far and share the insights from the major Wall Street firms. I’ll also share my own 2025 forecast that will guide my investments.
For context, at the end of 2023, the average Wall Street forecast predicted the S&P 500 would reach 4,861 by the end of 2024. As the index continued to climb, most strategists revised their target prices higher. At that time, I had a base case target price of 4,900, with an upside scenario of 5,250 for 2024. I was more bullish than Wall Street, but it turns out, not bullish enough.
As you’ll see below, every investment firm is now echoing a similar outlook for 2025. When such consensus forms, it’s a red flag for caution—we should prepare for the possibility that things may not unfold as anticipated.
Morgan Stanley 2025 S&P 500 Target Price 6,500
Morgan Stanley’s chief U.S. equity strategist, Mike Wilson, exemplifies why market forecasts should be taken with a grain of salt. After accurately predicting a bearish 2022, Wilson maintained his negative outlook through 2023 and 2024, forecasting a ~24% drop in the S&P 500 to ~3,200. Instead, the index surged 24% to close at 4,736 in 2023 and is up 25%+ in 2024, far exceeding his 4,500 target.
In early November 2024, Wilson projected a mid-2025 S&P 500 target of 5,400, 8.5% downside compared to the then 5,900 level. However, he has since relented his bearish stance and introduced a year-end 2025 target to 6,500, partially influenced by President-elect Donald Trump’s victory.
Wilson cites Federal Reserve rate cuts, stronger economic growth, and the potential for deregulation under Trump’s administration as reasons for a more optimistic outlook.
“A rise in corporate animal spirits post-election, as seen in 2016, could drive a more balanced earnings profile in 2025,” Wilson said.
While he acknowledges valuations remain elevated, he believes they’re justifiable if the economy holds steady. Median stock multiples, at 19.0x, are less stretched and should remain supported by broader earnings recovery in 2025.
Wilson advises focusing on high-quality cyclical stocks, especially in financials, while underweighting consumer discretionary and staples due to weak pricing power and tariff risks.
Despite his bullish shift, Wilson urges caution. “Investors should stay nimble amid changing market leadership and uncertainty around Trump’s policies on immigration, trade, and government spending,” he said, noting the potential for a significant policy-driven market shift.
Goldman Sachs 2025 S&P 500 Target Price 6,500
Goldman Sachs projects the S&P 500 will reach 6,500 by the end of 2025, delivering a 8% price gain and a 9.3% total return with dividends. Earnings per share (EPS) are forecasted to grow 11% in 2025 and 7% in 2026, with revenue growth aligned to 5% nominal GDP growth driven by 2.5% real GDP and cooling inflation at 2.4%.
President-elect Donald Trump’s trade policies, including targeted tariffs and tax cuts, are expected to offset each other’s impact on EPS, keeping Goldman’s forecasts in line with consensus at $268 for 2025 and $288 for 2026. That’s a P/E multiple of 24X for 2025 and 22.5X for 2025. Extremely expensive compared to 17X in 2022.
Goldman sees mid-cap stocks as a potential opportunity, noting the S&P 400’s history of outperformance, competitive earnings growth, and lower valuation at 16x P/E.
Risks for 2025 include high valuations amplifying the impact of negative shocks, potential broad tariffs, and rising bond yields. On the upside, more dovish Federal Reserve policies or favorable fiscal changes could boost returns.
“Investors should leverage periods of low volatility to capture upside or hedge downside using options,” David Kostin, chief US strategist advises.
Goldman Is Hedged By Having Conflicting Forecasts
What’s interesting is that Goldman’s U.S. strategist isn’t fully aligned with his own forecast for low long-term equity returns. He projects the S&P 500 to return just 3% annually over the next decade—a stark drop from the 13% average annual returns of the past 10 years and the historical 11% since 1930.
It’s possible we could see another strong year in stocks in 2025, followed by weaker performance in subsequent years. Kostin’s low 10-year return forecast stems from high valuations and concentration risk in the “Magnificent 7” companies dominating the index.
From a career protection standpoint, Kostin seems hedged. If the S&P 500 struggles in 2025, he can point to his conservative 10-year outlook. If it performs well, he can highlight his more bullish short-term forecast. In other words Kostin can speak out of both sides of his mouth and claim he is “right,” regardless of what happens. Smart!
Barclays 2025 S&P 500 Target Price 6,600
Head of U.S. equity strategy Venu Krishna predicts the S&P 500 will rise another 10% to 6,600 in 2025, driven by strong tech earnings growth and a resilient economy. While this forecast marks a slowdown from the index’s ~26% YTD gain in 2024, the analysts remain optimistic that favorable economic conditions will continue supporting the stock market.
“Macro slowing to still-healthy levels should support further US equity upside next year, though at a more moderate pace than ’23-’24. Constructive positioning and policy uncertainty provide opportunities for stock and sector selection,” they noted in a report.
The bullish outlook rests heavily on the robust U.S. economy. Consumer spending, deemed the “central pillar” of the economy, remains strong, bolstered by rising incomes and steady financial health. “The virtuous cycle between income growth and consumption remains intact,” Krishna wrote, adding that concerns over household financial distress are overblown given low delinquency rates and lighter consumer debt burdens compared to pre-pandemic levels.
The Risk To Their Forecast
Big Tech is also expected to drive market gains, with the strategist projecting Wall Street is underestimating earnings growth for the sector by 12%. However, they caution that hefty AI investments and investor impatience for returns could pose risks.
Inflation remains another concern, particularly if President-elect Donald Trump implements policies like sweeping tariffs and immigration crackdowns, which could drive up prices through 2026. Such scenarios may limit the Federal Reserve’s ability to cut rates as much as markets expect, creating potential headwinds for equities.
Additionally, rising Treasury yields—already near levels that have historically pressured stocks—could become problematic if fiscal expansion materializes alongside fewer rate cuts.
BMO 2025 S&P 500 Target Price 6,700
BMO’s chief investment strategist, Brian Belski, forecasts the S&P 500 will reach 6,700 by the end of 2025. Here are his three key reasons:
- The bull market’s momentum
The stock market is entering its third year of a cyclical bull rally. Historically, such rallies yield an average annual gain of 6%, but this cycle has far outperformed, with returns of 24% in 2023 and approximately 26% year-to-date in 2024. - Stronger-than-expected earnings growth
Despite concerns over high valuations, Belski argues that earnings growth is understated and expects a broadening of market performance beyond the dominant few tech stocks, which currently account for about a third of the S&P 500’s value. “The broadening-out effect is real,” he said, noting that the other 490 S&P stocks are showing faster earnings growth. - Supportive monetary policy
Markets will continue to benefit from easing monetary policy. The Federal Reserve has already cut interest rates twice since September, with a potential quarter-point cut in December. Goldman Sachs projects rates could fall over 100 basis points to 3.25%-3.5% in 2025, though some uncertainty remains under President-elect Donald Trump’s policies. Belski emphasizes that looser monetary policy and fiscal support will drive market gains, solidifying his bullish outlook for the S&P 500.
Deutsche Bank 2025 S&P 500 Target Price 7,000 (Most Bullish)
Deutsche Bank’s chief global strategist, Binky Chadha, predicts the S&P 500 will hit 7,000 by the end of 2025, a 16.7% gain from 6,000.
“We expect strong equity and bond inflows driven by robust risk appetite,” Chadha wrote, adding that annual S&P 500 buybacks could rise from $1.1 trillion to $1.3 trillion in 2025, aligning with earnings growth. “Even under conservative assumptions, the demand-supply backdrop for U.S. equities remains solid, pushing the S&P 500 toward 7,000.”
Looking ahead, Deutsche Bank anticipates stronger U.S. growth in 2025, bolstered by potential tax cuts and deregulation under the Trump administration. However, the firm warned that protectionist trade and immigration policies could derail its bullish outlook.
“The biggest risks lie in aggressive trade and immigration policies, which could hurt growth and drive up inflation,” Deutsche Bank cautioned. “This might force the Fed to halt rate cuts or even consider raising rates, pressuring bond yields and equities.”
Financial Samurai: 2025 S&P 500 Target Price 6,240 (least bullish)
After reviewing the 2025 Wall Street S&P 500 forecasts, it’s hard not to feel bullish about equities. If the median projection of an ~8% gain from 6,000 holds true, my equity portfolio should cover my family’s living expenses without any need for active income in 2025. Take your public equity exposure and multiply it by 8% to see how much you could potentially make as well.
That said, I remain cautious about the market reaching or exceeding 6,500 by year-end. Such a result would mark an extraordinary three-year run of +24%, +26%, and +8% gains. Sustained returns like these could theoretically shave a decade off the traditional retirement age, creating immense financial freedom for millions of Americans.
But life isn’t that easy. If it were, everyone would save and invest aggressively for 20 years, then relax and enjoy the good life with flat abdomens. Instead, many of us make life harder by chasing material possessions and struggling to delay gratification.
Valuation Isn’t Attractive Enough To Be Bullish
I believe there’s a 65% chance that a 1–30-year Treasury bond yield will outperform the S&P 500 in 2025, starting from January 1.
My target for the S&P 500 is 6,240, representing a modest 4% upside from 6,000. 6,240 equals 21.7 times 2026 earnings of $288. At 20 times forward earnings, the S&P 500 would trade at 5,760, for 4% downside. A decline in the index is easily possible given the historical S&P 500 P/E multiple is closer to 17-18X (4,896 – 5,184). If earnings grow slower than the 11% estimate in 2025 and 7% estimate in 2026, then the index is further at risk of decline.
I feel much the same as I did at the end of 2021—cautious and incredulous about the year’s S&P 500 gains. However, back then, like now, I didn’t have the conviction to predict a down year for 2022. I’m also not bearish enough to change my existing asset allocation to a more defensive position. My public equity exposure is still about 4% lighter as a percentage of my net worth than my 25% target due to my house purchase.
For more color on my cautious outlook, I left work in 2012 with a net worth of around $3 million, believing it was enough to sustain our lifestyle. Any gains since then feel like gravy. However, with two young children, living in expensive San Francisco, and neither my wife nor I having traditional day jobs, we need to remain relatively conservative with our investments and outlook. The last thing we want is to be forced back into the workforce due to a downturn.
Prefer Commercial Real Estate Over Stocks In 2025
After an incredible two-year rally in the S&P 500, I’m shifting my focus to commercial real estate in 2025. With the Federal Reserve firmly in a multi-year rate-cutting cycle, I see an attractive opportunity in real estate, especially given the likely policy direction under President Trump.
As a seasoned negotiator, Trump’s strong rhetoric on tariffs feels more like a strategic anchor than a firm commitment. His background as a real estate developer and vocal support for lower mortgage rates suggests he’ll prioritize policies that make housing more affordable. Coupled with his criticism of the Biden/Harris administration’s excessive spending, I expect him to propose measures aimed at curbing inflation, which could further drive down interest rates across the board.
With my expectation that the S&P 500 will see a modest 4% gain, the bar for outperforming equities through commercial real estate is relatively low. Pent-up demand has been building since the Fed began hiking rates in 2022, and builders significantly slowed new home construction in 2022, 2023, and 2024. This supply constraint points to an undersupplied housing market by 2026–2028.
I want to strategically acquire residential real estate complexes to capitalize on the eventual upward pressure on rents and property prices. As rent increases, so does net operating income, which directly boosts property values.
What Happens To The S&P 500 In Its Third Year After Back-To-Back 20% Gains?
The last time we saw back-to-back 20%+ gains in the S&P 500 was in 1995 and 1996. This momentum carried into 1997, which turned out to be a banner year with the S&P 500 closing up 31%. Despite the Asian Financial Crisis, the index continued its strong performance, closing up 28.58% in 1998 and 21% in 1999. It wasn’t until 2000 that the S&P 500 dropped 9.1% as internet and tech stocks collapsed.
With the Fed likely cutting rates in 2025 and perhaps into 2026, the setup is reminiscent of 1998, when the Fed began cutting rates in response to the Asian Financial Crisis and the Russian debt default in August that year. Based on historical patterns, 2025 could very well be another strong year for equities. I hope so!
Keep On Investing No Matter What
With valuations stretched and the potential for increased geopolitical tensions, the S&P 500 could easily correct by 10% or more in 2025. If that happens, I’ll be buying the dip, as I’ve consistently done since leaving work in 2012. Buying sell-offs is easier for me now because I’m investing for my children, who have 20+-year investment time horizons.
If I’m wrong and the S&P 500 delivers much more than a 4% gain, fantastic! I’ll hit my financial independence target date two years ahead of schedule. Stock market investors will all be richer as well. If the S&P 500 corrects, I’ll buy more stocks for my children.
While I’m not excited about public equities, I’m optimistic about real estate and private AI companies. I believe these two asset classes have greater ability to surprise on the upside. Will public equities finally take a backseat to other asset classes? We’ll find out a year from now!
Readers, what’s your 2025 S&P 500 forecast? Are any of you expecting a bearish scenario where the market drops by 10% or more? Let’s hear your thoughts! Other 2025 S&P 500 targets include: UBS: 7,000, RBC: 6,600, and Evercore ISI: 6,600 by June 2025.
Diversify Into Residential Private Real Estate & Venture
If you’re looking to diversify into real estate without taking on a mortgage or managing physical property, consider Fundrise. Fundrise is a private real estate investment platform that allows you to invest 100% passively in residential and industrial real estate. With over $3.2 billion in assets under management, Fundrise focuses on properties in the Sunbelt region, where valuations are typically lower, and yields tend to be higher.
I’ve currently got over $290,000 with Fundrise, split between real estate (46.4%) and venture capital (53.6%). I’m building up my venture capital position now to take advantage of what I think will be a robust IPO market in 2025 and beyond. I expect companies like ServiceTitan, Canva, and Databricks to go public in 2025 or 2026. I also expect real estate prices to start picking up as rates go lower.
As always, do your due diligence, diversify, and only invest money you can afford to lose. There are no guarantees with any risk assets. Corrections and bear markets are inevitable. Your investment choices are yours alone. The key is maintaining a proper asset allocation and investing consistently for the long term. Fundrise is a long-time sponsor of Financial Samurai.
Join 60,000 + readers and subscribe to my free weekly newsletter. This way, you’ll never miss a thing as I help you try and achieve financial freedom sooner. Financial Samurai began in 2009 and is all written based on firsthand experience.
