JPMorgan turns bullish and sees the S&P 500 rising 8% next year to 6,500

• JPMorgan pivoted to a bullish outlook, raising its 2025 S&P 500 target to 6,500.
• The bank had a long-held bearish view of the stock market, with a 2024 target of 4,200.
• The bank cites US exceptionalism, AI growth, and monetary easing by central banks as bullish factors next year.

JPMorgan is one of the last bears on Wall Street to throw in the towel and turn bullish.

In a Wednesday note, the bank issued its 2025 outlook for the US stock market and boosted its 12-month price target by 55% relative to its 2024 year-end target.

The bank expects the S&P 500 to end the year at 6,500, representing potential upside of about 8%. JPMorgan previously had 2024 year-end price target of 4,200.

"US equities should remain supported by the expanding business cycle, US Exceptionalism that is helping broaden the AI cycle and earnings growth, ongoing easing by global central banks and the wind-down of Fed's QT in 1Q," JPMorgan strategist Dubravko Lakos-Bujas said.

The bullish view is an about-face from the bank's previously bearish stance, which was spearheaded by former JPMorgan strategist Marko Kolanovic, who left the firm in July.

Kolanovic had been bullish on the stock market throughout much of the 2022 bear market, only to turn bearish right as the bull market took off in October 2022. Kolanovic held onto that bearish stock market view throughout the S&P 500's 26% surge in 2023 and up until his departure from the bank this summer.

For Lakos-Bujas, the strength of the consumer is an important component of his bullish view of the stock market.

The strategist highlighted that US households are benefiting from a tight labor market, have record wealth of about $165 trillion, and could benefit from potentially lower energy prices going forward.

Trump's election win earlier this month could also boost the stock market and economy, according to the note.

"The benefit of deregulation and a more business-friendly environment are likely underestimated along with potential for unlocking productivity gains and capital deployment," Lakos-Bujas said.

JPMorgan also highlighted that investments into the AI boom are unprecedented and could be a big driver of the economy going forward.

"The full-blown AI spending should be >$1 trillion once system-wide spend on tech (hardware and software) and industrial to R&D and other operating expenses are fully accounted," Lakos-Bujas said.

"To grow to the size of the US defense budget (~$850b) in less than 5 years is simply astounding," he added.

JPMorgan is targeting earnings per share of $270 for the S&P 500 next year, which would represent year-over-year growth of 10%. That assumption is based on 2% real GDP growth and another 100 basis points in interest rate cuts from the Federal Reserve between now and the third quarter of next year.

"In our view, the broadening earnings growth thesis should keep the positive equity market narrative intact," Lakos-Bujas said.

JPMorgan's bullish pivot came just a few weeks after Morgan Stanley's Mike Wilson, a strategist who had been largely bearish on the market for much of its two-year bull run, also turned upbeat.