The S&P 500 is forecast to reach 7,100 by the end of 2025, according to Oppenheimer, a 16.7% increase from the last close of 6,090 and a 14.52% increase from the firm's 2024 year-end target of 6,200. This is supported by a sustainable monetary policy, a still robust economic environment, and favorable labor markets.

S&P 500 earnings are projected to grow 10 percent to $275 in 2025 and $250 in 2024, which would make a forward price-to-earn (P/E) multiple of 25.8x. Equities are critical to long-term financial goals like retirement savings and education funding, and private investor engagement across demographic groups is a driving force, said Oppenheimer, who highlighted that.

Oppenheimer's key sectors include information technology, consumer discretionary, industrials, financials, and communication services. The firm also pointed to further rallies in smalland mid-cap stocks as the Federal Reserve continues its rate-cutting trajectory.

The automobile is an apt analogy, he said, with AI being the next transformative force. "This technology could drive efficiency and productivity improvements across all sectors and contribute to solving some of the world's challenges," said Oppenheimer's strategists.

Its outlook agrees with broader market sentiment as it sees sector rebalancing and rising economic activity encouraging a continuation of the bull market in 2025. The strategists warn that economic utopia is overstated, but a sound market foundation supports AI's growth potential and equity markets.

This article first appeared on GuruFocus .