S&P 500 All-Time Highs: 5 Catalysts Driving It Higher

The S&P 500 (NYSEARCA: SPY) ended Q2 and H1 2025 with a bang, rising to set a new all-time high and is likely to continue higher in Q3. This is a look at five reasons why investors can expect the rally to continue, and how high the S&P 500 may go. Technically speaking, the move to new highs is significant, bringing robust targets into play. They align with signals given at the start of the year, suggesting that this market can move to the 7,200 level or higher within the next few quarters. 

1. NVIDIA Moves to New Highs, Could Rise by 200% Over Next Decade

The number one reason the S&P 500 can sustain its new highs and continue to rise is NVIDIA (NASDAQ: NVDA). NVIDIA has been the single most crucial stock to the rally for the last two years and continues to hold its leadership position. That is due to its first-mover advantage in AI and the current high demand for AI. 

The latest news includes robust guidance, followed by new deals, suggesting that the upcoming results will not only be strong, outperforming the consensus estimate, but also that the guidance will be robust, and the trends will likely continue in the subsequent quarter or two. 

Reasons to believe that this stock can rise by 200% within the next ten years include the valuation and the analysts' projections. The valuation places this stock at roughly 12x its 2035 EPS forecast, a forecast that is likely to be conservative and a valuation 65% below the average. The potential result is a steady uptrend with periodic accelerations driven by the quarterly reports. 

2. Microsoft Moves to New Highs, Could Rise by 200% Over Next Decade

Microsoft (NASDAQ: MSFT) is in an equally enviable position to NVIDIA, emerging as the leading AI-capable hyperscaler, outgrowing its competitors and taking share. Highlights from its business reveal strength in all cloud and AI-related businesses, centered on Azure.

The guidance is also strong, calling for sustained growth, and analysts forecast it to continue well into the next decade as businesses lean into digitization, the adoption of AI increases, and inference needs rapidly escalate.

Regarding its analysts and valuation, the analysts' trends are leading this market to a 15% gain and fresh all-time highs; the valuation metrics resemble NVIDIA’s, suggesting a 200% increase in share price by 2035.

3. The Magnificent 7 Are Still Magnificent

Generally speaking, the Magnificent Seven stocks, the most important stocks in the market, including NVIDIA, look good. Aside from MSFT and NVIDIA, which are already at new highs as Q2 comes to a close, the others are in rebound mode and on track to do the same. The laggards are Tesla (NASDAQ: TSLA) and Apple (NASDAQ: AAPL), but even their markets look ready to rebound. 

Tesla is moving past its Musk/Trump issues while Apple’s stock looks ready for a significant upswing, potentially unleashed by the upcoming report. Apple is expected to report tepid growth, but it may exceed its forecasts while issuing favorable news. The news investors want to see regarding AI and how it improves operations and sales. Regardless, with these stocks moving higher, representing about 35% of the S&P 500 valuation, the S&P 500 index has little choice but to follow. 

4. Advanced Micro Devices AI Reality Caught Up With the AI Expectations

Advanced Micro Devices (NASDAQ: AMD) is an example of how AI spending trends are broadening. While NVIDIA remains the leader, Advanced Micro Devices has been able to catch up with its stack development and is on the cusp of a significant inflection. The company demonstrates traction with its AI and data center equipment, and it is expected to accelerate its momentum next year with the launch of the MI400 line, a rack-scale offering that will be competitive with NVIDIA. 

The takeaway is that the AI wave supports more companies than just NVIDIA, and market breadth will likely improve, helping the S&P 500 sustain its uptrend. Regarding the AMD stock price, it is in a rebound mode, with the rebound recently accelerated, and there is potential for it to rise another 45% this year. 

5. The Worst-Case Economic Scenario Is Far From Reality

Risks and headwinds remain, but one thing is clear: the fears generated by Trump’s policies and tariffs were extreme and unrealized. The reality is that the worst of the tariffs will never be enforced, trade negotiations are progressing, and deals are being made.

Investors should expect this to continue and economic stability to follow quickly. The market's driver will be the earnings outlook. It is positive but diminished due to the fears, with potential for improvement as the year progresses. The market rally will not only continue in this scenario but may gain significant momentum. 

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