A top strategist who called last year's rally sees AI driving the S&P 500 up 12% by the end of 2025

• Tech will keep driving the S&P 500 to all-time highs, according to Mary Ann Bartels.
• Tariffs and inflation concerns are overblown, Bartels believes.
• Bartels sees the S&P 500 reaching 7,000 by year-end.

Don't bet against the continued strength of Big Tech.

Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, expects to see AI drive earnings growth and boost the S&P 500 to new all-time highs by the end of the year.

Bartels, whose accurate bullish forecast earned her a spot in Business Insider's Oracles of Wall Street last year, is predicting a 12% surge in the stock market by the end of 2025.

"Without any major disruptions, we believe it will be possible for the S&P 500 to reach 7,000 by year end," Bartels wrote in her midyear outlook.

It's definitely an above-consensus call, as Goldman Sachs has only recently bumped up its year-end outlook to 6,600, And there are still strategists, such as Stifel's Barry Bannister, urging caution about a slowing economy and calling for a drop to 5,500 over the next six months.

AI will boost earnings

"What's driving this is not new," Bartels said on CNBC on Tuesday. "It's really the technology of AI that we've been talking about."

Bartels believes the tech sector will continue to drive the stock market upward as new advancements in AI, robotics, and crypto lead to earnings growth. In the meantime, tariff volatility hasn't shaken her conviction.

Earnings in Q1 2025 came in above expectations, with 78% of companies beating earnings expectations. The outlook for the second quarter is more muted as tariff volatility injects uncertainty into company outlooks.

But Bartels believes low expectations are laying the groundwork for another earnings surprise. She sees tariff rates falling in the next few months as more negotiations happen and believes cooling inflation will help lower interest rates.

In Bartel's view, let the stock market winners continue to be winners. She's not concerned about market concentration among Big Tech names.

"Earnings growth remains relatively scarce, found mostly in Technology and Tech-Related issues, in Industrials, Financials, and in those Utility issues that benefit from accelerating demand for electricity," Bartels wrote.

Tech stocks have dominated over the last year, with the NYSE FANG+ Index breaking out to new highs and outpacing the S&P 500's performance.

It's still early innings for the AI trade as companies continue to pour billions into compute, networking, and storage infrastructure.

"Earnings have been the strongest in Technology, along with the return on equity (ROE) — which is why money keeps investing in these companies," Bartels wrote.

That's not to say that the market will remain narrow. While Bartels believes megacaps are likely to continue outperforming, she points to broadening participation in the market rally among financials and industrials as AI improves profits across the economy.

Bartels is doubling down on her contrarian position even as others remain cautious.

"The sentiment of the market is still very bearish," Bartels said on Tuesday. "There's still some skepticism, so that also makes us bullish on the equity market."