| 
It’s that time of year again – when stock market forecasters like myself dust off their crystal balls to make predictions about the months ahead. Last year, I made 10 big predictions about the stock market for 2024 – and, pretty amazingly, most of them ended up being spot-on! I said the S&P 500 would rally more than 15% in 2024. As of this writing, it is up more than 25%. I anticipated that growth stocks would continue to crush value stocks. And they did, with growth stocks broadly outperforming value stocks by about 3-to-1 throughout the year. I said AI and tech stocks would stay the hottest stocks on Wall Street. That has certainly been the case. As of this writing, the tech-focused Nasdaq is up more than 30% in 2024, while the Global X Artificial Intelligence ETF (AIQ) is up about 30%. In terms of the crypto markets, I called Bitcoin going to $100,000. Of course, it did just that. I also said that consumers would keep spending and keep the economy turning, which did come to fruition. I expected AI chip stocks (other than Nvidia (NVDA)) would rally, and they did, with Broadcom (AVGO), AsteraLabs (ALAB), Semtech (SMTC), and CredoTechnologies (CRDO) all more than doubling this year. And I even said nuclear stocks would go, well, nuclear – and that happened, with big names like ConstellationEnergy (CEG) and Vistra (VST) soaring about 100% and 250% this year, respectively. Smaller nuclear stocks like NuScale (SMR) did even better, with that one popping more than 500% in 2024. What 2025 Has In Store As far as end-of-year market predictions go… last year’s were pretty darn good. But I hope to do even better this year. So, without further ado, then, here are my top stock market predictions for 2025. 1: The S&P 500 will rise by more than 20% again next year In 2023 and ’24, the S&P rose more than 20%, marking the first time it has notched back-to-back years of 20%-plus gains since 1995/96. What happened in 1997? The S&P 500 rallied more than 20% again. We think it will do the same in 2025. We expect that earnings-per-share (EPS) estimates across the S&P will rise by about 10% over the next year, driven by strengthening economic activity. And we also think that the S&P 500’s P/E multiple will expand by more than 10%, driven by lower interest rates and increased confidence in the U.S. economic outlook. That combination should drive another year of 20%-plus market gains. 2: Growth stocks will continue to dominate Growth stocks absolutely crushed value stocks in both 2023 and 2024 – and we think their dominance will continue in 2025. Lower interest rates will help growth stocks next year, as will more pro-growth and deregulation policies out of Washington, D.C. – not to mention continued euphoria about AI. Altogether, we think prevailing macroeconomic conditions support continued outperformance from growth stocks in 2025. 3: Once more, the AI/tech theme will stay the hottest theme on Wall Street For the past two years, AI has been the hottest theme on Wall Street. We don’t see that changing in 2025. From a big-picture perspective, we are still relatively early in the AI Boom. And in our view, the 1990s’ Dot Com Boom is the best analog for this current era. That boom lasted from 1995 to 2000. But the AI Boom is just wrapping up its second year. So, if today’s boom continues to follow the ‘90s-era trajectory, there’s still a few great years on deck. That’s why we think AI stocks will soar once again in 2025. 4: Speculative tech stocks could have a banner year in 2025 Throughout 2024’s market rally, so-called “spec tech” stocks – early stage growth stocks that are rising very quickly but which often are not yet profitable – were laggards… until Donald Trump won the presidency in early November. Since then, spec tech stocks have been running laps around the rest of the market. We think that will continue in 2025. That is because Trump’s pro-growth and deregulatory policies mostly benefit smaller technology companies. Indeed, during the first year of Trump’s first term as president, spec tech stocks performed incredibly, with many more than doubling in 2017. We think spec tech stocks will have another banner year in the first year of Trump 2.0. 5: AI Appliers will outperform AI Builders Those who follow our research know that we see the AI Boom unfolding via two waves. First is dominated by the AI Builders (the companies building the infrastructure for AI); then the AI Appliers (the companies developing and deploying next-gen AI software applications) will take the baton. For most of 2023 and ‘24, we were in the AI Builder Boom. Companies were spending billions upon billions of dollars to create new AI data centers, buy powerful new semiconductor chips, secure additional energy, etc. And in that time, AI Builder stocks – most of which are semiconductor plays – soared. But since July, AI Builder stocks have struggled amid worries about a slowdown in this infrastructure boom. Meanwhile, AI Applier stocks – like Axon (AXON ), AppLovin (APP), and Duolingo (DUOL) – have absolutely soared. We believe the AI Boom has shifted into Phase 2, wherein AI Appliers will reign supreme. In fact, we think that shift will accelerate in 2025, which is why we expect that AI Applier stocks will outperform AI Builder stocks next year.
6: Autonomous Vehicle stocks will soar Given the promising developments we’ve witnessed in the industry this year, we think 2025 will be the year that society officially enters the Age of AVs. And as such, we are very bullish on Autonomous Vehicle (AV) stocks in 2025. Just consider: - Alphabet’s (GOOGL) self-driving unit, Waymo, is already completing over 150,000 weekly autonomous rides throughout San Francisco, Los Angeles, Phoenix, and Austin. Plus, the firm is launching services in Atlanta and Miami in early 2025 and is even expanding to Tokyo next year, too.
- Over in China, Baidu (BIDU) is operating a self-driving ride-hailing network that is of a similar size.
- Tesla (TSLA) has unveiled its fully autonomous cars – the CyberCab and CyberVan – both of which come without a steering wheel or pedals.
- Aurora (AUR) plans to launch fully autonomous commercial trucks in early 2025.
- Uber (UBER) is testing out the autonomous delivery of food via Uber Eats in Phoenix.
Folks, we’re confident that the Age of AVs has arrived, and we think 2025 will be the year that these AVs start going mainstream. As they do, we expect AV stocks to soar. 7: eVTOL stocks will take flight Our favorite “sleeper” stocks for the new year are eVTOL (electric vertical takeoff and landing) stocks, also known as “flying car” stocks. These companies are making a new type of electric aircraft – a sort of car/helicopter hybrid intended to be used as a form of hyper-efficient urban transport, shuttling people relatively short distances, all in a matter of minutes and for just a few bucks. We like these stocks for 2025 because a few of these firms are expected to finally launch commercial operations next year. As the industry inches closer toward widespread rollouts, we see eVTOL stocks taking flight. We think these stocks are primed for big gains in 2025. 8: Quantum AI stocks will continue to shine For the past few years, we have been exceptionally bullish on quantum computing stocks as some of our favorite early stage tech plays. And finally, in late 2024, Wall Street started to take notice, too, helped by Google’s big breakthrough with its new quantum chip, Willow. Google announced that the powerful new processor solved a complex calculation – one that takes its fastest classical supercomputer around 10 septillion years to complete – in just five minutes. Aided by that news, quantum computing stocks have soared over the past few months, with a handful up more than 1,000% since early September. Now, we think that rally is overdone in the short term. But we expect these stocks to stay hot throughout 2025 because the quantum computing industry should increasingly move toward practical applications next year. As it does, quantum stocks will likely keep roaring higher. 9: Bitcoin will make a run for $200,000 We called Bitcoin hitting $100,000 this year, and now, we’re calling for Bitcoin to push toward $200,000 next year. Our technical and fundamental analysis suggests that 2025 will be the last year of this Fourth Crypto Boom Cycle. Now, that does mean that we think Bitcoin could crash in 2026 and ‘27. But before it does, BTC could charge toward $200,000 in 2025. That’s why we are staying bullish on BTC for now. 10: Altcoins will soar in 2025 like they did in 2021 Crypto investors will recall that, in recent memory, the best year for the broader crypto markets was 2021. That was the year of the altcoins. In that year, more than 20% of the top 300 altcoins by market cap soared more than 1,000%. You saw gains like ~40,000% from Gala (GALA/USD) and ~25,000% from CEEK VR (CEEK/USD). Anyswap (ANY/USD), XYO (XYO/USD), and Axie Infinity (AXS/USD) all rose more than 15,000%. Sandbox (SAND/USD), Polygon (MATIC/USD), and Terra (LUNA/USD) all popped more than 10,000%. Solana (SOL/USD), Flux (FLUX/USD), Fantom (FTM/USD), Kadena (KDA/USD), Telcoin (TEL/USD), and BakeryToken (BAKE/USD) all jumped over 5,000%. In other words, tons of altcoins posted major gains in 2021. We think something similar could happen in 2025. That’s especially because signs have started to emerge suggesting that we are shifting into so-called “altcoin season” – the part of the crypto boom cycle when altcoins start to outperform Bitcoin. I think we will sprint full-boar into altcoin season next year. The Final Word And those, folks, are my 10 big predictions for 2025. Like I said, this year, most of my major predictions for 2024 came true. And funnily enough, the same is true of 2023… But here's why I'm genuinely excited about 2025: we're seeing multiple growth engines firing at once. The AI revolution keeps gaining steam, autonomous vehicles are finally ready for prime time, and the crypto market could be setting up for another historic run. Sure, last year was a pretty great one for investors – but I truly believe 2025 could be even better. With interest rates likely to head lower, corporate profits looking strong, and potential pro-growth policies on the horizon, we've got the recipe for another year of serious market gains. I can't wait to see how things play out in the months ahead. As always, keep an eye on your inbox – I'll be checking in regularly with updates and new opportunities as we navigate what should be another stellar year in the markets. Here's to an amazing 2025! Sincerely, | 
Comments
Post a Comment