Citing economic growth and corporate profitability as main drivers, Goldman Sachs (GS, Financials) forecasts the S&P 500 will reach 6,500 by the end of 2025. Up from the bank's prior 12-month aim of 6,300, the revised target shows a 10.3% rise from the most recent level of the index.

• Warning! GuruFocus has detected 7 Warning Signs with GS.

Chief equities strategist David Kostin of Goldman Sachs said in a letter that the projection calls for further economic and profit growth while bond rates stay almost current. The company forecasts an 11% increase in corporate profitability combined with 2.5% growth in U.S. real GDP by 2025.

Goldman admitted various hazards to American stocks, including probable market gains should the Federal Reserve take a more dovish posture. The company did, however, express concerns about the tariff measures of former President Donald Trump and the possibility of rising bond rates.

The company also observed that a group of technology-oriented firms known as the "Magnificent 7" is probably going to keep outperforming the more general S&P 500 in 2025. Goldman expects the outperformance advantage to fall to seven percentage points, the lowest difference in seven years, nevertheless. Although these firms' robust profits maintain their leadership, more general macroeconomic concerns such trade policy and growth might cause the balance to change in favor of the 493 remaining companies in the index.

This article first appeared on GuruFocus.