JPMorgan forecasts the S&P 500 will surge to 6,500 by 2025. Dubravko Lakos-Bujas, the bank’s top strategist, credits artificial intelligence, economic resilience, and deregulation for this bullish outlook. This target represents an 8% rise from current levels, driven by AI-related spending and a business-friendly environment.

AI and deregulation lead the charge

Lakos-Bujas points to the U.S. as the global growth leader, supported by a strong labor market and increasing capital market activity. “The business cycle is expanding,” he said. AI is already fueling investor enthusiasm. U.S. equities have soared 26% in 2024, with Nvidia up 176% and Meta Platforms climbing 62%. Lower interest rates, following Federal Reserve cuts in September, and households sitting on $165 trillion in wealth have further boosted market optimism.

Lakos-Bujas highlights deregulation and AI as the main drivers of growth. Investors expect lower taxes and reduced red tape following Donald Trump’s election win. The S&P 500 jumped 4.1% since November 5, reflecting this optimism. Lakos-Bujas believes deregulation is underestimated and could unlock major productivity gains.

Key stocks benefiting from AI and deregulation include Coinbase, Alphabet, Microsoft, Exxon Mobil, Tesla, Toll Brothers, and Citigroup. Capital spending on AI continues to broaden, supporting stronger deal activity across markets.

Economic resilience and investor confidence

Wall Street firms agree on a bullish 2025 outlook. UBS predicts the S&P 500 will hit 6,400, while Goldman Sachs and Morgan Stanley match JPMorgan’s 6,500 target. Deutsche Bank remains the most optimistic, projecting 7,000 by year-end 2025.

The Federal Reserve’s rate cuts are helping inflation approach its 2% target. Over 100,000 jobs were added in nearly every month of 2024. Households are benefiting from record-high wealth, which increased by $10 trillion in the last year and $50 trillion since the pandemic.

Lakos-Bujas acknowledges geopolitical uncertainty but sees more opportunities than risks. He expects a favorable policy environment to boost capital deployment and drive productivity. With AI innovation surging and regulatory burdens easing, JPMorgan’s forecast paints a bright future for the S&P 500.

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