Another Wall Street strategist sees the S&P 500 (^GSPC) gaining by a double-digit percentage over the next year.

On Monday night, Goldman Sachs chief US equity strategist David Kostin initiated a 2025 year-end S&P 500 target of 6,500, representing about an 11% gain in the benchmark index from current levels. The call falls in line with the 6,500 projection Morgan Stanley made the day prior and just shy of BMO Capital Markets' 2025 year-end target of 6,700.

"In our baseline macro outlook, the economy and earnings continue to grow and bond yields remain around current levels," Kostin wrote. "But event risk remains high heading into 2025, including from the potential threat of an across-the-board tariff and the potential risk from even higher bond yields."

Kostin and others say the market could surge higher even without the "Magnificent Seven" tech stocks' massive outperformance.

His work shows that the combination of Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) outperformed the other 493 stocks in the S&P 500 by 63 percentage points in 2023 and 22 percentage points thus far this year.

In 2024, this was driven by Magnificent Seven earnings outperforming the rest of the index by 30 percentage points. But that margin is projected to fall to just 6 percentage points in 2025, per consensus estimates. This, Kostin believes, will lead to that cohort beating the other 493 stocks by just 7 percentage points in 2025, the narrowest level of outperformance from the Magnificent Seven dating back to 2018.

"The narrowing differential in earnings growth rates should correspond with a narrowing in relative equity returns," Kostin wrote. "Although the 'micro' earnings growth story supports continued ‘Magnificent 7’ outperformance, more 'macro' factors such as economic growth and trade policy lean in favor of the S&P 493."'

Within this call for a broadening of stock market performance within the S&P 500, Goldman also argues that the stocks leading the artificial intelligence trade may begin to shift. Goldman believes gains will shift from a group it has dubbed AI "infrastructure," which includes companies on the ground floor of AI like Nvidia (NVDA), to a group of companies that will have "enabled revenues" from AI, meaning those that can use AI to drive sales but aren't actually selling things like AI chips to other companies. The largest companies by market cap in Goldman's enabled revenues basket are Meta and Apple.