The S&P 500 has had a bit of a rough start to 2025. Despite delivering a stellar 26% total return in both 2023 and 2024, America’s flagship index dropped into correction territory last month.
There’s been a bit of a rebound since. However, continued uncertainty surrounding tariffs, inflation, and potential negative GDP growth is sparking fresh volatility in the markets. And the latest analyst forecasts suggest more pressure could be just around the corner.
Forecasts for 2025
The Economy Forecast Agency has outlined its expectations for the S&P 500 throughout the remainder of the year. And the situation appears to be quite bleak in the short term.
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| Month | S&P 500 Close | Gain/Loss vs Today |
| April | 4,647 | -7.9% |
| May | 4,256 | -15.7% |
| June | 4,026 | -20.2% |
| July | 3,969 | -21.4% |
| August | 4,076 | -19.2% |
| September | 4,101 | -18.7% |
| October | 4,318 | -14.4% |
| November | 4,333 | -14.1% |
| December | 4,379 | -13.2% |
Assuming these predictions are accurate, the next couple of months look to be quite unpleasant for US stock investors.
However, the forecast also reveals that the worst might be over between June and August, potentially creating a window of opportunity to snap up some top-notch stocks at a discount. Even more so, given that the same group of analysts has placed a price target on the S&P 500 of 5,708 by the end of 2026. That’s 44% higher than the projected lows in July this year.
A potential winner in 2026?
Forecasts should always be taken with a healthy pinch of salt. After all, they rely on some key assumptions that rarely come true. As such, investors shouldn’t try timing the market with these figures.
Nevertheless, planning for a further decline in the S&P 500 is likely a prudent move right now. Personally, I’m building up cash in a high-interest savings account to ensure I’ve got plenty of dry powder if US stocks continue to tumble. At the same time, I’m building a shopping list of which stocks look tempting at a lower price. That list includes CrowdStrike (NASDAQ:CRWD).
Despite the chaos the company caused with a botched software update last year, most of its customers have continued to stick with the cybersecurity platform. What’s more, the group’s net retention rate currently sits at 112%. In other words, customers are also spending more.
As such, the company remains on track to achieving its $10bn annualised recurring revenue goal by 2031. For reference, this figure currently stands at $4.2bn as of January 2025 – up 23% year on year.
Given its impressive growth trajectory and track record, it’s not surprising that the stock trades at a lofty premium. Even on a price-to-sales basis, the stock is valued at almost 22 times revenue. But if it ends up getting caught in the middle of another S&P 500 downturn, then a much better buying price could emerge.
Risk and reward
CrowdStrike is far from a risk-free enterprise. We’ve already seen the damage that a bad software update can cause. And customers may not be so forgiving if this incident is repeated in the future, regardless of the quality of its technology. Don’t forget there are plenty of competing cybersecurity firms out there.
As for the S&P 500, it’s impossible to know for certain where it’s heading in the short term. But in the long run, I remain bullish.
