
Red light, green light: equity markets stalling or pedal to the metal?
Back in February in our blog article Disinflation’s Bumpy Road we wrote: “With valuations now appreciably higher than at the beginning of 2023 and 2024, and now arguably stretched in parts of the market – particularly in high-growth tech – investors had been counting on rate cuts to justify further gains. But if the Fed remains on hold, or worse, if markets begin to price in a “higher for longer” scenario, equity risk premiums might have to adjust.”
The ‘Magnificent 7’ stocks (Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla) appear to be rolling in neutral gear, with an observable slowing in earnings growth. To be clear, earnings are still growing but the rate of growth is slowing down. So what does this all mean?
Where to next?
For this missive, I thought I’d turn my attention outwards to see what others are saying about where equities will journey in 2025.
What follows below is a compilation of some of the most popular and (third-party-verified) successful stock market forecasters, based on their track records and prominence on financial websites and social media platforms. These forecasters’ predictions are also widely discussed on market-related chat forums.
I’ve included their current forecasts the S&P 500 Index – a key benchmark for global equity markets – for the end of 2025, along with a summary of their logic.
Thomas Lee, Managing Partner and Head of Research at Fundstrat Global Advisors
Lee is a Wall Street strategist with over 25 years of experience in equity research, and has been top-ranked by Institutional Investor every year since 1998. Prior to co-founding Fundstrat, he served as J.P. Morgan’s Chief Equity Strategist from 2007 to 2014, and previously as Managing Director at Salomon Smith Barney. Find below his prediction and comments.
Forecast: S&P 500 to reach 6,600 by year-end 2025 (with a mid-year peak of 7,000).
Logic: Lee bases his forecast on a strong first half driven by tailwinds such as a “Fed put” (Federal Reserve support), pro-growth Trump policies, and robust earnings per share (EPS) growth estimated at $275-$300. He anticipates a weaker second half due to historical patterns of market corrections following strong gains. Thomas believes continued economic resilience and policy-driven market support will boost equities in the first half, though he cautions about potential overvaluation risks later in the year.
Mike Wilson, Chief U.S. Equity Strategist and Chief Investment Officer at Morgan Stanley
As CIO and Chair of the Global Investment Committee, Wilson offers his perspectives on markets to both institutional and wealth management clients.
Forecast: S&P 500 to hit 6,500 by year-end (after dipping to 5,500 in the first half).
Logic: Wilson predicts a drop to 5,500 in the first half of 2025 (almost there!) due to economic slowdown fears and tariff-related uncertainties under the Trump administration. He expects a recovery in the second half, reaching 6,500 (a near 16 per cent gain from current levels), driven by improving earnings and monetary policy easing.
Brian Belski, Chief Investment Strategist and leader of the Investment Strategy Group at BMO Capital Markets
Belski’s position at BMO Capital Markets coupled with his experience in senior strategy and research roles at Oppenheimer & Company, Merrill Lynch, and Piper Jaffray has helped him to form an opinion on where the market will land. Please find his thoughts below.
Forecast: S&P 500 to reach 6,700 by year-end 2025.
Logic: Belski bases his bullish outlook on three key factors: the ongoing momentum of the current bull market (entering its third year), stronger-than-expected earnings growth beyond tech giants, and supportive monetary policy from the Federal Reserve’s rate cuts. He argues that earnings growth is understated and that a broadening market (beyond the “Magnificent Seven” stocks) will drive gains. His forecast assumes a stable economic backdrop with no major recession.
David Kostin, Partner and Chief U.S. Equity Strategist at Goldman Sachs
Kostin’s 14-year tenure at Goldman Sachs, and previous experience as Principal at Salomon Bros provides us with another well-formed take. Have a look into his forecast and reasoning.
Forecast: S&P 500 to reach 6,500 by year-end 2025.
Logic: Kostin predicted a nine per cent price gain (10 per cent total return with dividends) fueled by solid U.S. economic expansion and an 11 per cent earnings per share (EPS) growth projection for 2025. His logic includes expectations of increased merger and acquisition (M&A) activity due to looser financial conditions and potential deregulation under Trump. However, he warns of risks from high valuations (Price to earnings (P/E) at 21.7x) and possible tariff-induced inflation, which could temper gains.
Jeremy Grantham, Co-Founder and Investment Strategist, at GMO
Grantham co-founded GMO in 1977 and is a member of GMO’s Asset Allocation team, serving as the firm’s long-term investment strategist. Prior to GMO’s founding, Mr. Grantham was co-founder of Batterymarch Financial Management in 1969. Grantham is a noted ‘permabear’(an individual who holds a pessimistic outlook on the stock market). Read into his opinion below.
Forecast: Unlike the other forecasters cited here, Grantham offers no specific price target for the S&P500 but his forecast implies a significant decline (potentially below 5,000) in 2025.
Logic: Grantham warns of a “super bubble” in U.S. equities, pointing to inflated valuations (S&P 500 forward P/E at 21.2 vs. a 10-year average of 18.3) and unsustainable AI-driven tech gains. His logic suggests that a correction is overdue after two years of 20 per cent + returns, with economic slowdowns or policy missteps (e.g., tariffs) as potential triggers. He compares the current market to historical bubbles like 1929 and the dot-com era.
Dr. Ed Yardeni, President of Yardeni Research, Inc.
Before his launch of Yardeni Research, Yardeni served as Chief Investment Strategist of Oak Associates, Prudential Equity Group, and Deutsche Bank’s US equities division in New York City. He was also the Chief Economist of CJ Lawrence, Prudential-Bache Securities, and EF Hutton. He taught at Columbia University’s Graduate School of Business and was an economist with the Federal Reserve Bank of New York. He also held positions at the Federal Reserve Board of Governors and the US Treasury Department in Washington, D.C. His forecast and logic are highlighted below.
Forecast: S&P 500 to reach 7,000 by year-end 2025 (with a long-term target of 10,000 by 2029).
Logic: Yardeni, a prominent bull, predicts a 16 per cent gain in 2025, driven by strong economic growth, lower tax rates, and reduced regulation under Trump. His logic hinges on continued corporate profitability and investor enthusiasm, with a longer-term view of a “Roaring 2020s” fueled by technological innovation. He sees the current bull market as having room to run, supported by historical patterns of extended rallies.
Summary table
Forecaster |
Firm |
2025 S&P 500 forecast |
Logic key points |
Thomas Lee |
Fundstrat |
6,600 (peak 7,000) |
Fed support, Trump policies, strong EPS |
Mike Wilson |
Morgan Stanley |
6,500 (dip to 5,500) |
Early dip, then recovery via earnings, policy |
Brian Belski |
BMO Capital |
6,700 |
Bull market momentum, broad earnings growth |
David Kostin |
Goldman Sachs |
6,500 |
Economic expansion, M&A, high valuation risks |
Jeremy Grantham |
GMO |
Below 5,000 (implied) |
Bubble burst, overvaluation, tech slowdown |
Ed Yardeni |
Yardeni Research |
7,000 |
Economic growth, policy tailwinds, innovation |
These forecasts reflect a range of perspectives, from bullish optimism to bearish caution – with grounding in macroeconomic trends, policy impacts, and market valuations.
As always, remember that while these forecasters have strong reputations, predictions are inherently uncertain, and these forecasts are subject to change as 2025 unfolds.
The Polen Capital Global Growth Fund own shares in Amazon and Microsoft. This article was prepared 19 March 2025 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Amazon or Microsoft, you should seek financial advice.