Investing

Oppenheimer Thinks the Stock Market Will Surge 20% in 2025. 1 Stock To Buy Before it Does

Joey Frenette

Published: January 6, 2025 1:05 pm

It’s a new year, and with that, the 2025 S&P 500 forecasts from the big names on Wall Street are in. Undoubtedly, such year-ahead stock market predictions don’t always come true, especially if something flies in that wasn’t on anyone’s radar. That said, for the most part, the big forecasters are optimistic that 2025 will be another green year for stocks. However, the big question is whether the markets will be able to pull off another year of more than 20% returns. It would be a historic moment if the S&P 500 were to gain another 20-30% for the year.

Perhaps the recent quantum computing hype could join AI in helping give a lift to a market that has a rare opportunity to score a 20%+ return hat trick.

Will the hats fly onto the ice by year’s end?

Most market strategists don’t see stocks returning a minimum of 20%. Indeed, it’s a hard thing to do. In any case, many of the big banks and financial firms are calling for another robust year of gains.

S&P 500 going for the “three-peat”

Most notable among them is the call from Oppenheimer’s Chief Investment Strategist John Stoltzfus, who’s among the most bullish of the strategizing crowd in 2025.

They think the S&P 500 could land another 20% gain, with an S&P 500 price target of 7,100. And it won’t be all about the Magnificent Seven, either. Oppenheimer sees stocks outside of the famed Magnificent Seven doing a bit more heavy lifting in 2025.

Additionally, they like the economic growth trajectory, consumer spending patterns, and, of course, the AI tailwind and its ability to produce real productivity gains for a wide range of companies. While there are risks on the horizon, it’s not hard to see why the firm is so upbeat in 2025. Add Trump’s focus on keeping the stock market going strong into the equation, and perhaps a “three-peat” isn’t as far-fetched as the skeptics believe.

Meanwhile, the odds against another year with over 20% returns for the S&P 500 seem quite low. I do think that if the right cards fall into place, the stock market can extend its run if AI advancement maintains the pace. Further, there may even be a surprise upside should the AI firms investing heavily in the effort finally have ample money coming in.

The big question will be whether the cash inflows from AI products will begin to show signs of eventually exceeding investments. With the exception of Apple (NASDAQ:AAPL), which may be perceived as “behind” in the AI race despite the launch of Apple Intelligence last year, it could take some time for the Magnificent Seven titans to earn markedly more than they spend on AI. In any case, I think Oppenheimer is right when it says the gains will broaden beyond the titans in the new year.

Snowflake stock’s in the “sweet spot” of AI software

Snowflake (NYSE:SNOW) stands out as a catch-up play to ride the AI wave in 2025. The stock shocked and awed during its last quarterly earnings beat. However, since then, the stock has fallen out of favor, sinking around 17% from its 52-week high on seemingly no real negative news. The correction could be a buying opportunity for those seeking growth beyond the Magnificent Seven as Snowflake continues to triple down on all things AI.

The company’s partnership with Claude-maker Anthropic, which it landed late last year, is a notable tailwind that could help the two AI innovators really gain on rivals. Indeed, Snowflake is a data cloud titan that’s serious about AI under its new CEO. In any case, investors seem quick to forget the magnitude of the beat Snowflake delivered back in November.

The big question is whether demand could power even more such double-digit moves. Though expectations will be higher going into the next quarter, I do think there’s a good chance they’re not high enough, as AI software and applications look to become a top story for the new year.

Wedbush Securities’ Dan Ives is one of the bulls on SNOW stock, with a $190 price target (17.3% gains from current levels) and much enthusiasm for the start of the “AI software era.” Notably, he views Snowflake and its range of AI-enabling services as in the “sweet spot.” Given Ives’ track record in recent years, I wouldn’t take his bullish words lightly, especially as Snowflake flies under the radar of other AI winners to start the year.