So here we are, closing out 2025, and the stock market is basically doing its best impression of that friend who keeps winning at poker night. You know the one – they’re up big, everyone’s getting a little suspicious, but they just keep raking in the chips.
The S&P 500 just hit another all-time high at 6,932 (because of course it did), marking a solid 18% gain for 2025. That’s on top of 24% in 2023 and 23% in 2024. At this point, the market’s three-year winning streak is starting to feel like that Tesla that somehow never needs maintenance – impressive, but you’re waiting for the other shoe to drop.
The Nasdaq? Up 22.3% this year. The Dow? A more modest but still respectable 14.5%. Even Nvidia, after getting absolutely wrecked in the first four months of 2025, managed to claw back to a 40% gain. Because apparently, AI chips are the new avocado toast – everyone needs them, and they’re weirdly expensive.
The Valuation Reality Check
Now, let’s talk about the elephant in the room: valuations. The market’s price-to-earnings ratio is sitting at 31, which is basically the financial equivalent of paying $31 for a $1 slice of pizza. The Shiller P/E (that’s the fancy 10-year inflation-adjusted version) is near an all-time high at 40.59. Translation: stocks are pricier than a Manhattan studio apartment.
But here’s where it gets interesting – Wall Street’s crystal ball gazers are still bullish for 2026.
The 2026 Predictions Game
Oppenheimer is going full YOLO with an S&P 500 target of 8,100 – that’s a 17% gain from here. Their reasoning? The economy keeps chugging along like that one reliable friend who always shows up on time, and corporate earnings keep beating expectations like a drum solo.
Morgan Stanley is slightly more chill at 7,800 (12.5% gain), betting on a perfect storm of Fed rate cuts, tax breaks, and AI making everything more efficient. Basically, they’re banking on the economic equivalent of finding a $20 bill in your old jeans.
JPMorgan sits in the middle at 7,500 (8% gain), acknowledging that yes, valuations are “undoubtedly rich” – which is Wall Street speak for “this is expensive, but we’re going with it anyway.”
Bank of America is the party pooper with a 7,100 target (just 2.6% gain), essentially saying “pump the brakes, people.”
The Bottom Line
Look, predicting the stock market is like trying to predict which Netflix show will get canceled next – you might get lucky, but you’re mostly just guessing. What we do know is that this bull market has been running for three years, valuations are historically high, and yet the smart money is still betting on more gains.
Whether that’s confidence or delusion, well, that’s what makes markets interesting. Just remember: past performance doesn’t guarantee future results, but it sure makes for good cocktail party conversation.