The S&P 500‘s exploded in 2024. Falling inflation and interest rates paired with a surge in artificial intelligence (AI) spending have sent the US flagship index skyrocketing by more than 26.5% since the start of the year, and by 28% when including dividends. Yet despite this tremendous growth, it seems analyst forecasts for 2025 are even more bullish
Can it reach 9,178 points?
Looking at the latest projections from the Economy Forecast Agency, the general consensus is that the US stock market’s going up. The most optimistic prediction for the S&P 500 is that it will reach as high as 9,820 points by November next year. The agency has also produced a more pessimistic outlook whereby the index only reaches 8,465 points, with the average sitting at 9,178.7.
But even if the actual performance falls towards the lower end of this forecast range, that’s a potential 41% gain from current levels, before even counting dividend returns. Of course, such predictions should always be taken with a healthy pinch of salt.
It’s important to remember they’re notoriously inaccurate. With so many factors influencing the stock market, a lot of assumptions have to be made, and these are rarely all fulfilled. As such, the actual S&P 500 performance over the next 12 months could be starkly different.
Nothing is guaranteed
Suppose inflation were to suddenly make a comeback, interest rate cuts may be swiftly paused or even reversed. The newly re-elected president Donald Trump has been fairly clear about his plans to hike import tariffs to the US, which is expected to create short-term inflation.
On the other hand, his more dominant position on the geopolitical landscape could also see a swifter resolution to the ongoing geopolitical conflicts, improving supply chains worldwide.
All of this is to say there are a lot of unknowns. But let’s assume the predictions are accurate. What stocks should investors be buying today to capitalise on this upward momentum?
A growth stock I’ve just bought
CrowdStrike (NASDAQ:CRWD) is by no means a cheap growth stock. However, shares have taken a significant tumble following the botched update incident earlier this year that crashed 8.5m devices worldwide.
The business is facing legal battles, particularly from Delta Airlines as a result of the outage, which is less than ideal. However, management seems to have mitigated most of the long-term damage.
Its quick response, paired with a software patch, re-established most systems within 24 hours, working closely with customers to restore trust. And within a month, the firm had deployed new validation and testing procedures to provide additional safeguards against such errors happening again.
Of course, this enterprise is still far from risk-free. Investors will soon discover the full impact of the outage in the upcoming earnings report on 26 November. And if the situation is worse than expected, further share price volatility may lie ahead. Not to mention competitors like Zscaler and Palo Alto Networks are constantly trying to chip away at Crowdstrike’s market share.
With free cash flow hitting record highs across the first six months of its fiscal year and with new AI-powered cybersecurity solutions being launched, Crowdstrike seems to be in a much stronger position today than a few months ago. That’s why I’ve just added this S&P 500 business to my portfolio.
This post was originally published on Motley Fool
