The S&P 500 has spent the bulk of the year grinding higher, then catching its breath.

Robust AI spending, resilient earnings, and a dovish Fed backdrop continued to pique investor interest through the spring and summer, despite the one-off rate scares and tariff chatter.

By late September, the index was positioned in the mid-6,600s, a level that reflects superb year-to-date gains without the choppiness associated with such a run.

Over the past three months, the story has been more about consolidation. Rallies toward the high-6,600s faded when yields ticked higher, while the dips toward the low-6,600s found support as earnings beats rolled in. Also, the market’s no longer just a tech show with financials and cyclicals stepping up.

Into that backdrop arrives a fresh, market-moving call from Bank of America.

The investment bank just issued a head-turning 12-month S&P 500 price target that’s built on surprising pillars rather than the typical multiple-expansion story. 

It’s safe to say that the call carries massive implications for how investors position themselves at the back end of the year.

The S&P 500 opened with Bank of America eyeing 7,200 within a year.

Image source: Santiago/Getty Images

Bank of America joins the bullish chorus, calling the S&P 500 to 7,200 within a year

Bank of America just bumped its 12-month S&P 500 target to 7,200, calling for those gains to be anchored more by profits than by multiple expansion.

The bank pegs the 12-month return at an eye-catching 8%, noting its EPS Surprise indicator flipped positive. At a Sept. 29 close of roughly 6,661, that points to +539 points upside.

Analyst Savita Subramanian’s team argues that the current market structure supports elevated but defensible valuations.

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These are marked by lower leverage, longer-dated debt, and a bigger share of high-quality earners compared to previous cycles. That’s why BofA has pushed back on the idea that rich p/es must crack.

Subramanian writes in her note:

The index has changed significantly from the ’80s, ’90s and 2000s… anchor to today’s multiples as the new normal, adding recently that the S&P 500 is trading like it’s the new risk-free rate.

BofA’s call leans on earnings power, backed by greater efficiency, AI, and broader capex as rates ease, though sticky inflation or tariff shocks may trip it up.

Quick takeaways

• New 12-month target: 7,200 (+8.1% from 6,661).
• Core thesis: Profits and productivity, not just higher p/es
• Valuation stance: “New normal” greater than mean-reversion
• Key risks: EPS growth slows down, sluggish Fed cuts, tariff flare-ups

Wall Street split on S&P 500’s next leg

Wall Street is mostly divided on the S&P 500’s trajectory heading into the back half of 2025. Some strategists are leaning bullish with Fed cuts and AI momentum building, while others warn the rally could soon fizzle.

BMO Capital Markets, for instance, just staked one of the most bullish bets, lifting its S&P 500 year-end target to 7,000 from 6,700 on Sept. 26.

Chief investment strategist Brian Belski framed the move as turning BMO’s bull case into its base case, letting his clients know that U.S. equities remain in a decades-long secular bull market.

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He’s holding firm to his 2025 EPS forecast of $275, which is among Wall Street’s most optimistic, and sees rate cuts igniting cyclicals alongside tech. His roadmap includes a bull case of 7,300 with EPS at $290, a base case of 7,000, and a bear case of 6,000 if stagflation impacts the Fed’s ability to continue cutting rates.

Elsewhere, Goldman Sachs is more tempered at 6,800, on the back of policy easing and steady earnings. Morgan Stanley’s Mike Wilson sticks with 6,500, warning of “rolling corrections” even if the dips prove shallow.

Wedbush’s Dan Ives continues to pound the tech table, calling for another eye-catching 10% upside in AI stocks, a view that effectively aligns with Cathie Wood’s conviction on software-driven gains.

Quick takeaways:

• BMO sets 7,000 as the new base case; this implies a 5% upside.
• Goldman 6,800; Morgan 6,500; Wall Street split stays wide.
• AI is still the bull driver, with Ives and Wood leading the charge.

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