The S&P 500 has achieved record highs in 2025, with Trivariate Research predicting it could hit 10,000 by the end of the decade, driven by AI-fueled companies like Microsoft. Chief market strategist Kenny Polcari believes this ambitious goal is achievable, despite potential obstacles along the way. The index currently sits at 6,250, up 6.5% for the year.

Trivariate’s strategy revolves around sustained earnings growth and productivity gains, estimating 10-11% annual EPS growth until 2030. While this projection is slightly above the long-term average, it could lead to significant index gains. AI-driven productivity boosts, like Microsoft saving $500 million, are already showing promise.

Despite potential risks like high profit margins and interest rate hikes, Trivariate remains optimistic about hitting 10,000 on the S&P 500. They anticipate a possible “growth scare” in the near future but believe overall market trends will prevail. The focus is on sectors like tech, financials, and healthcare for long-term gains.

Outdated valuation models may underestimate the market’s potential, with current margins supporting higher price-to-earnings ratios. Trivariate advises overweighting large-cap sectors and sees healthcare as a “contrarian” AI beneficiary. While challenges may arise, the long-term outlook remains positive for AI and technology-driven efficiencies.

Read more at Yahoo Finance: Why the S&P 500 could reach 10,000