The forecasts for the S&P 500 (^GSPC) for next year have reached a new high.

John Stoltzfus, chief investment strategist at Oppenheimer, gave a 2025 S&P 500 target of 7,100 for year-end 2025 in a note to clients Sunday evening, the highest forecast among strategists tracked by Yahoo Finance. The target represents an upside potential of around 17% for the benchmark index from Friday’s closing price.

Stoltzfus wrote that his optimistic outlook is based on “a number of factors, including current monetary policy of states, the resilience of economic growth, business activity, consumers and job creation demonstrated over the past few years and this year.” .

The stock market trading at ever-increasing valuations is a key part of Stoltzfus’ call, pushing his target well above the competition, whose targets range from 6,400 to 7,007. Stoltzfus expects S&P 500 earnings per share to reach $275, representing growth of about 10% from his year-end 2024 forecast.

This is not far above consensus. However, Stoltzfus expects the S&P 500’s 12-month price-to-earnings ratio to rise to 25.8 times forward earnings, well above the five-year average of 20 times earnings.

Stoltzfus is one of several Wall Street equity strategists who cite robust economic growth as a key factor for the coming year. For example, Wells Fargo’s Christopher Harvey, who is the only other strategist to predict the S&P 500 will close above 7,000 in 2025, highlighted a “cyclical opportunity catalyzed by upward revisions to GDP.”

A popular note in that pitch was an argument that the market rally is continuing to extend from the “Magnificent Seven” tech stocks to the other 493 members of the S&P 500. Stoltzfus noted that the extension of the stock rally over the past year suggests that “the current bull market is likely strong enough to scale the proverbial ‘Wall of Worry’ by 2025.”

While Stoltzfus cited rising artificial intelligence use cases as a tailwind, he noted that he sees this as a potential benefit for all 11 sectors as it leads to productivity gains.

“We are not suggesting paradise on earth, nor are we expecting a ‘Goldilocks world,’ but rather a real potential for AI to achieve greater efficiency in key areas that challenge progress across sectors and society today,” Stoltzfus wrote. “The potential for better virtual shovels and virtual drills to sift through a world of ever-increasing mountains of data and find solutions more quickly could be one of the biggest contributions.”

The story continues