Investing.com– The S&P 500 is expected to rise 11% in 2025 on strong earnings growth, analysts at Goldman Sachs said in a recent note, although gains are expected to slow after a stellar performance in 2024.
GS expects an 11% rise to 6,500 points this year, compared to a roughly 25% return in 2024.
Five stocks – NVIDIA Corporation (NASDAQ: ), Apple Inc (NASDAQ: ), Amazon.com Inc (NASDAQ: ), Alphabet Inc (NASDAQ: ) and Broadcom Inc (NASDAQ: ), GS analysts have driven most of the index’s returns noted that the equal-weighted S&P 500 rose 13% in 2024.
GS also noted that the last time the S&P 500 returned consecutive annual gains of over 20% was in 1998 and 1999, just before the collapse of the Dotcom bubble.
The index is expected to rise mainly due to improved earnings, with GS projecting EPS growth of 11% in 2025 and 7% in 2026. Forward price-to-earnings is also expected to remain unchanged at 21.5 times until end of 2025
The S&P 500 has had a slow start to 2025, extending declines since December as investors booked some measure of gains from 2024. Uncertainty over US interest rates and policies under President-elect Donald Trump also weighed on risk appetite, particularly the outlook for local stocks.
The communications services sector was the S&P 500’s biggest mover in 2024, as tech heavyweight stocks rallied on artificial intelligence hype. This trend is expected to slow somewhat in 2025, as investors seek more clarity on how much AI is impacting corporate earnings.
The technology industry outperformed the S&P 500 in 2024, rising about 29%.
