If a bubble is forming in U.S. stocks, it has plenty of room to expand before it bursts, according to strategists at Societe Generale SA.

A team at the bank led by Manish Kabra said the S&P 500 Index can climb to 6,250—roughly 20 percent higher than its current level—before reaching the multiples seen at the peak of the dot-com boom in 2000. That suggests the stock market can continue its sharp advance despite brewing worries that it has run up too far.

"We think the current rally has been driven more by rational optimism than irrational exuberance," Kabra, SocGen's head of U.S. equity strategy, said in a note to clients. He cited the "better-than-perceived" earnings breadth, new profit-cycle highs, and an upturn in global economic indicators. "We expect these drivers to maintain their momentum."