Bank of America warns: The S&P 500 stock price to net value ratio is approaching the peak of the "Internet Bubble" era, and the alarm bell is ringing for overheating of cryptocurrencies and U.S. stocks...

After Trump's election as President of the United States, cryptocurrencies and the US stock market have been buoyed and have shown an upward trend, continuously setting new historical highs. However, in this prosperous financial market, the vast majority of investors believe that the market can continue to rise, but some investors are also concerned that a huge financial bubble is gradually forming.

Bank of America: US stocks and cryptocurrencies are full of bubbles

According to a report by Bloomberg, Bank of America (BofA) strategist Michael Hartnett has recently expressed his concerns, stating that the strong rebound in the US stock market and the cryptocurrency market may cause these assets to overheat. According to Bloomberg data, the price-to-book ratio of the S&P 500 index has risen to 5.3 times in 2024, just a step away from the peak of the 5.5 times tech bubble in March 2000. In addition, Hartnett specifically pointed out that if the S&P 500 index approaches 6,666 points (about 110% of the current index, the current index is 6090 points) in early 2025, it may face a high risk of "excessive rise". However, he also mentioned that Bank of America's current bull-bear indicator shows that global investors have not yet shown a clear market excitement.

Wall Street banks predict: US stocks will rise at least 5% next year

On the other hand, Wall Street also has multiple major banks (commercial banks, investment banks) that have recently released forecasts for the performance of the S&P 500 index in 2025, and most of them are still slightly bullish. According to the compilation by TKer.co editor Sam Ro, the forecasts of 14 major banks are as follows:

1. UBS, target price 6,400 points: In the first half of 2025, due to the slowdown in US economic growth, the stock market may face a slight downward pressure. After the corporate earnings expectations are adjusted to a more realistic level, the performance in the second half of the year is expected to improve.
2. Morgan Stanley, target price 6,500 points: Due to the uncertainty brought by the election results, investors need to be flexible in responding to changes in market leadership. The baseline scenario target is 6,500 points, the bull market scenario reaches 7,400 points, and the bear market scenario is 4,600 points.
3. Goldman Sachs, target price 6,500 points: The net profit margin is expected to expand by 78 basis points to 12.3% in 2025, and further increase to 12.6% in 2026. The Trump administration's potential tariff policies on imported cars and some Chinese imports, as well as the 15% corporate tax rate for domestic manufacturers, will offset each other's impact on earnings.
4. JPMorgan Chase, target price 6,500 points: The US stock market will benefit from the continued expansion of the business cycle, AI-driven revenue growth, global central bank easing policies, and the end of the Fed's quantitative tightening. In addition, US households benefit from the tight labor market and record wealth levels, but geopolitical uncertainty and the evolution of the policy agenda increase complexity.
5. CFRA, target price 6,585 points: Based on 2.4% real GDP growth in the US, 13% growth in S&P 500 operating earnings, and continued declines in inflation and interest rates, the market still has upside potential. However, as valuations are relatively high compared to the 10-year average, the expected annual gain is lower than the average.
6. RBC, target price 6,600 points: Stable economic growth, earnings growth, political tailwinds, and declining inflation will support the upward trend in the stock market, maintaining high price-to-earnings ratios.
7. Barclays, target price 6,600 points: For the US stock market, we believe that the positive macroeconomic factors will outweigh the negative impacts next year. We expect most industries to be affected by deflationary pressures and the slowdown in non-US economic growth in 2025, but the performance of large tech companies will still provide positive support to the stock market.
8. Bank of America, target price 6,666 points: Preparing for the peak of the cyclical bull market. Nine driving factors include: (1) a red wave (Republican victory), (2) the Fed cutting interest rates, (3) accelerating profit growth, (4) reshoring of manufacturing, (5) a productivity cycle, (6) a shift from people spending on technology to technology spending in all areas, (7) urban infrastructure overhaul to attract businesses, (8) capacity constraints due to long-term underinvestment in manufacturing, and (9) the lightest allocation to cyclical industries since the global financial crisis.
9. BMO, target price 6,700 points: The bull market can, will, and should slow down from time to time, and such a digestion period will further strengthen the healthy foundation of the long-term bull market. Therefore, we believe that 2025 will be characterized by a more normalized return environment and more balanced performance across industries, sizes, and styles.
10. HSBC, target price 6,700 points: We expect next year's stock returns to be focused on earnings growth, as valuations have already become too high... Overall, we expect the US economy to slow but remain resilient, and achieve 9% earnings growth, accompanied by some margin expansion.
11. Deutsche Bank, target price 7,000 points: The market is focusing on late-cycle indicators, while early-cycle signals have started to improve. We believe that some cyclical factors have not yet fully played out, including the transition from destocking to restocking, capital expenditures outside of technology, capital markets and M&A activity, loan growth, and growth in other regions globally. Given the potential for both positive and negative impacts on growth from policy changes by the new government, we believe that growth will remain a priority.
12. Yardeni Research, target price 7,000 points: After Trump's victory in the 2016 presidential election, we observed the economy and stock market filled with "animal spirits", a term used to describe spontaneous optimism. Now, with Trump's re-election, this animal spirit has returned.
13. Capital Economics, target price 7,000 points: These forecasts are based on the assumption that the US economy will not prevent the bubble formed by the AI boom from continuing to expand in the stock market. Although we will not raise our forecast simply because the index is rising or due to a positive reaction to a Trump victory, we believe his policies may have a net negative impact on growth in the US and other regions.
14. Wells Fargo, target price 7,007 points: Overall, we expect the Trump administration to create an increasingly favorable macroeconomic environment for the stock market, while the Fed will slowly lower interest rates. In short, this is a background for the stock market to continue rising.

Overall, the various institutions are generally optimistic about the S&P 500's target price for 2025, but considering factors such as economic policy and inflation rate, there is some divergence in market forecasts, with target prices ranging from 6,400 to 7,007 points, equivalent to a 5% to 10.5% increase.