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The S&P 500 has been a reliable wealth-creator for many decades. According to Curvo, it has delivered a compound annual growth rate of 10.29% over the last 33 years!
Since the beginning of April when the index plummeted 10.5% in just two days, it’s done what it does best — recovered lost ground.
In just six weeks, it’s rebounded 14.6%, and now sits at 5,912, as I write. This means any investor who ploughed £10k into an index tracker back then would now have about £11,460. Nice.
But where next for the benchmark index? Let’s take a look at what the experts are saying right now.
Caution
Unsurprisingly given all the global trade uncertainty, many Wall Street banks and investment firms have been reducing their S&P 500 targets for 2025. Recently, Oppenheimer slashed its forecast from 7,100 to 5,950, while UBS trimmed its own from 6,400 to 5,800.
A recent Reuters poll of 51 market-watchers produced a median target of 5,900. That was down from 6,500 in a poll from February, a time when the US market was at a record high. This shows how cautious and unsure most investors are right now. Essentially, they have no idea where things are heading next.
For what it’s worth, I predicted the S&P 500 will finish higher this year, and it’s currently up 0.5%. But my unscientific methodology is simply based on the fact that the index goes up roughly two out of every three years. So there’s more chance of it going up than down, historically speaking.
As a long-term investor, I spend very little time looking at index-level earnings forecasts. Instead, I invest every month in one or two stocks that I think look attractive both now and in the long run.
Massive digital labour opportunity
One S&P 500 stock I’m interested in buying is Salesforce (NYSE: CRM). This is the cloud-based software giant best known for its customer relationship management platform (hence the CRM ticker). It helps businesses manage customer data, sales, marketing, support, and more.
In Q1, Salesforce’s revenue grew 8% to $9.8bn, with around 95% of that subscription-based (recurring). From this it generated $6.3bn in free cash flow, which is a very healthy 64% margin.
The strong quarterly results enabled management to raise its full-year guidance by $400m. Salesforce now expects as much as $41.3bn, which would represent solid 9% year-on-year growth.
Chief operating and financial officer Robin Washington said: “I’m pleased by our momentum as we capitalise on the exciting agentic AI opportunity.”
Agentic AI involves software agents taking action, either independently or in collaboration with humans. Salesforce has built a platform — Agentforce — that allows companies to deploy AI agents to handle business tasks, interact with customers, and automate workflows.
It has closed over 8,000 deals since launching Agentforce last year, and it now has the fastest uptake of any product in the firm’s history.
One risk here though is fierce competition from Microsoft and ServiceNow. Both also offer powerful AI agents.
However, I rate Salesforce’s chances, given its own massive installed base of customers. PepsiCo, for example, is now using Agentforce to build an “agentic layer” around its sprawling operations.
The stock’s trading at a reasonable 24 times forward earnings. At this valuation, I think Salesforce is worth considering.
