Goldman Sachs Forecasts S&P 500 at 6,500 by 2025

By Siddarth S
(Reuters) – Goldman Sachs has forecast the S&P 500 index to reach 6,500 by the end of 2025, aligning with Morgan Stanley's prediction, driven by continued growth in the U.S. economy and corporate earnings.

The target suggests an upside of 10.3% from the index's last close of 5,893.62.

On Monday, Morgan Stanley predicted that the benchmark index would hit 6,500 by the end of next year, citing broadening U.S. earnings growth expected to persist in 2025 as the Federal Reserve lowers interest rates and business cycle indicators improve.

Goldman identified the 'Magnificent 7' stocks – Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla – as likely to outperform the other 493 companies in the index next year, although by the narrowest margin in seven years, about 7 percentage points.

Despite a favorable 'micro' earnings narrative, Goldman emphasized that broader 'macro' risks related to growth and trade policies could favor the S&P 493 companies.

The brokerage anticipates corporate earnings growth of 11% and a real U.S. GDP growth of 2.5% for 2025, while warning of high risks for the U.S. equity market due to potential tariffs and rising bond yields.

A more favorable fiscal policy or a dovish Fed could present potential upside risks, according to Goldman.

Trump's recent election has also drawn attention to his pledges to lower taxes and raise tariffs, which could drive inflation and limit the Fed's ability to lower interest rates.

Goldman projected earnings-per-share for S&P 500 companies at $268 in 2025.