Comparing 2025 predictions for the S&P 500
The stock market is rich with diverging outlooks, and the S&P 500 remains at the center of many bold predictions. Some analysts foresee steep downturns while others maintain optimism about continued growth.
In this blog, we’ll compare three different predictions of the S&P 500: Ed Yardeni’s bullish confidence, Goldman Sachs’s moderate stance, and John Hussman’s bearish warning.
Ed Yardeni: Bullish confidence
Background: Ed Yardeni, the president of Yardeni Research, is a veteran market strategist with a reputation for long-term bullish views on U.S. equities. He is known for coining the term “bond vigilantes”.
Key prediction: Yardeni projects that the S&P 500 will reach 7,000 by 2025 and 10,000 by 2030—a 66% increase by the end of the decade. 1
Rationale:
- Policy support: Yardeni attributes this growth to pro-business policies such as tax cuts and deregulation, which he believes will support economic expansion.
- Geopolitical factors: Resolutions to global conflicts, such as the Russia-Ukraine war and tension in the Middle East, will unlock additional market gains.
Graph from Yardeni Research
Takeaway for investors: Yardeni emphasizes staying invested in equities, particularly in sectors positioned to benefit from pro-business policies. His long-term approach aligns with strategies that prioritize resilience and compounding returns over time.
Goldman Sachs: A moderate approach
Background: Goldman Sachs, a global leader in investment banking and market research, is known for its data-driven outlooks.
Key prediction: Goldman Sachs forecasts that the S&P 500 will reach 6,500 by 2025, driven by steady earning growth. The firm anticipates an 11% increase in earnings per share in 2025 and a 7% rise in 2026.2
Rationale:
- Economic expansion: Goldman attributes its forecast to robust economic growth, supported by a 5% annual increase in revenue due to nominal GDP expansion.
- Valuations: While the current price-to-earnings (P/E) ratio of 21.7x suggests elevated valuations, Goldman views these levels as sustainable in a stable macroeconomic environment.
- Risks: The firm acknowledges potential challenges including trade policy disruptions and market corrections due to high valuation levels.
Graph from Goldman Sachs
Takeaway for investors: Goldman Sachs strikes a balance between optimism and caution. They recommend leveraging periods of low volatility to capture upside potential or hedge against risks. Additionally, investors might consider mid-cap stocks, which offer relative value and the potential for historical outperformance compared to large caps.
John Hussman: A bearish warning
Background: John Hussman is the president of Hussman Investment Trust. He is well-known for accurately predicting the 2000 and 2008 market crashes.
Key prediction: Hussman warns that the U.S. stock market, including the S&P 500, is in the “third great speculative bubble” in history, on par with 1929 and 20003. He warns that this could result in a market crash exceeding 60%.
Rationale:
- Valuation: Hussman points to the total market cap of nonfinancial stocks relative to their value added, which has reached levels similar to historic peaks in 1929 and 2000.
- Market breadth: The rally is narrowly concentrated, with fewer than one-third of S&P 500 stocks trading above their 200-day moving averages. This signals instability despite headline gains.
- Concentration risk: The top 10% of stocks by market cap now account for about 76% of total capitalization—a level historically associated with speculative bubbles
Graph from Hussman Funds
Takeaway for investors: Hussman urges caution despite AI enthusiasm and hopes of a soft economic landing. He highlights significant downside risks stemming from overvaluation and weak market breadth. Investors may want to consider reducing equity exposure or adopting more defensive strategies to mitigate potential losses.
Comparing the S&P 500 predictions
To better understand these diverging outlooks, here’s a side-by-side comparison of the analysts’ predictions, their rationale, and suggested strategies for investors:
| Analyst/Institution | Prediction | Key rationale | Suggested investor strategy |
| Ed Yardeni | S&P 500 is forecasted to reach 7,000 by 2025 and 10,000 by 2030 | Pro-business policies and potential resolutions to geopolitical conflicts | Stay invested and focus on growth sectors benefiting from favorable policies |
| Goldman Sachs | S&P 500 to reach 6,500 by 2025 | Earning growth and economic expansion, but with risks from elevated valuations and trade policy disruptions | Capture upside during low volatility and consider mid-cap stocks for relative value |
| John Hussman | S&P 500 is in a third great speculative bubble, with a potential crash exceeding 60% | Overvaluation, narrow market participation, and concentration risks | Reduce equity exposure and adopt defensive strategies |
Conclusion
The varying predictions of Yardeni, Goldman Sachs, and Hussman highlight the complexity of financial forecasting. Each perspective offers unique insights into external factors and potential market dynamics, ranging from geopolitical conflicts to business policies.
Investors should remember that forecasts are not definitive blueprints, but rather informed perspectives shaped by different analytical approaches. These predictions serve as valuable insights, not guarantees.
Beyond these predictions, the following philosophy still prevails: time in the market is typically better than timing the market. Long-term investors who maintain a disciplined strategy and stay invested over extended periods have historically grown their wealth more than those attempting to predict short-term movements in the market4.
There are hundreds of analysts that provide future projections of investments. The three above were chosen randomly by Frec to provide an overall review of the S&P 500 representing the three main viewpoints. These projections are not a guarantee of future performance and are intended for educational purposes.
