Wall Street banks are betting that US stocks will cool in 2025 as investors turn cautious about the AI ​​boom.

This year, US stocks have risen despite the current slowdown in the US economy. However, banks have predicted that the US stock market could decline next year due to waning investor confidence in the ability of technology companies to generate profits from their investments in artificial intelligence.

Many investors expected the U.S. economy to slow the S&P 500, but it has risen 28% this year on big gains in technology stocks and Donald Trump's election victory.

However, doubts about AI, coupled with a weak set of quarterly results, are prompting investors to turn to other industries. How will the stock rise?

Stocks are expected to slow.

Morgan Stanley, HSBC and Goldman Sachs are among the 10 major banks that expect the Standard & Poor’s 500, the benchmark U.S. stock index, to rise about 8% to about 6,550 between now and the end of the year, setting a new record high.

However, when next year begins, stocks are expected to slow. “We are fighting [. . . ] the euphoria that helped people buy stocks against the realities of next year,” said Mike Wilson, chief investment officer at Morgan Stanley.

There are also “pockets of over-enthusiasm” in the industry, said Venu Krishna, a strategist at Barclays, who explained that tech giants have yet to prove they can monetize their AI investments.

"We are cautious because it is unrealistic that this kind of exceptional returns will continue," he added.

Artificial intelligence has been a great source of income for US stocks. US stocks have been at record highs this year, thanks to gains in tech giants like Nvidia, which has surged 180%, and Meta, the parent company of Facebook, which has surged 73%.

However, there is concern about the potential return on the large investment in AI that these companies are making.

In June, analysts at Goldman Sachs released a report titled “The AI ​​Generation: Too Much Spending, Too Little Benefit?”

A Wall Street bank has questioned whether a $1 trillion investment in AI over the next few years “will ever pay off.” Sequoia Capital, an early investor in ChatGPT developer OpenAI, has estimated that tech companies will need to earn $600 billion to recoup their AI investments.

Wall Street's forecast for US stock performance in 2025

Bank of America expects the S&P 500 to hit a record high of 6,666 by the end of the year, the sign of the bullish beast. The index is expected to rise 10% from its current price of 6,050.

Also, UBS Global Wealth Management expects the S&P to rise 10% to 6,600 by the end of 2025.

On the other hand, BMO Capital Markets expects an 11% increase in the S&P, with a price target of 6,700. Brian Belsky, chief investment strategist at BMO, hinted that there is potential for further gains as the Federal Reserve continues to cut interest rates.

Goldman Sachs forecast a 9% increase for the S&P 500 next year to 6,500 in a client letter.

However, Deutsche Bank has a high estimate for Wall Street's price at the end of 2025 at the S&P 5000. The strategy group led by Binky Chadha expects an additional gain of about 16% for U.S. stocks.

Analysts led by Savita Subramanian pointed to lower interest rates, higher labor market productivity, and an expected tax rate cut under President Donald Trump as positive factors that could lead to the increase.

However, analysts have expressed concern that the inflationary impact of a second Trump term in office, which could include tariffs on several countries, remains uncertain.

In addition, Chadha of Deutsche said: “We are in unfamiliar territory now, and everyone is talking about uncertainty. But I think the uncertainty is greater on the upside.