Trend Watch: Where Markets Are Heading Next!

Archive edition · Market data and company circumstances reflect 11 January 2025, when this newsletter was sent.

Top 5 Market Trends to Watch in 2025

As we step into the new year, the markets are buzzing with anticipation for what 2025 will bring.

While some of the major themes from previous years are poised to continue, others may evolve or give way to new trends. Here's a deep dive into five compelling themes to keep an eye on in the year ahead.

AI: The Evolution Continues

Artificial Intelligence (AI) remains the centerpiece of market conversations, with its influence only growing stronger. In 2025, we expect to see a shift from the infrastructure phase to the platforms and applications phase of AI investment. This evolution could redefine enterprise tech spending, balancing day-to-day software applications with advanced AI solutions.

AI’s potential for exponential growth could sustain market indices. Watch for advancements in generative AI and machine learning applications that enhance efficiency and innovation.

• NVIDIA (NVDA): Continues to lead in AI chip technology.
• Snowflake (SNOW): Driving data management for AI platforms.
• Teradyne (TER): Supporting AI in automated testing.
• Sempra Energy (SRE): Powering AI data centers.

De-regulation, M&A and Capital Markets

A shift in the political landscape could create a favorable environment for mergers and acquisitions (M&A) and capital market activities. The financial sector, in particular, stands to benefit from reduced regulatory hurdles under a second Trump Administration.

Stay alert for sector-specific M&A opportunities and monitor the regulatory landscape for signals of increased activity.

• Citigroup (C): Poised to capitalize on M&A activity.
• Evercore (EVR): A leading M&A advisory firm.
• Vulcan Materials (VMC): Positioned for infrastructure-driven growth.
• S&P Global (SPGI): Essential for capital market analytics.

Re-powering America

America’s energy infrastructure is undergoing a transformation to meet growing demands from AI-driven data centers, electrified transportation, and the manufacturing renaissance. This "re-powering" effort is driving significant investment in utility capital expenditures (CapEx).

The intersection of sustainability and technology creates long-term opportunities. Look for investments in energy infrastructure and companies supporting the clean energy transition.

• Sempra Energy (SRE): Leading efforts in sustainable energy solutions.
• Vulcan Materials (VMC): Benefiting from infrastructure projects.

Deglobalization: Reshaping Supply Chains

The trend toward deglobalization, i.e the process of reducing the interconnectedness between countries, particularly in terms of trade and economic relations, is accelerating.

The United States, in particular, is expected to impose higher tariffs on imports, creating challenges and opportunities.

Deglobalization could lead to sector-specific winners and losers. Focus on companies with robust domestic operations and those adapting to evolving trade policies.

• Vulcan Materials (VMC): Benefiting from domestic infrastructure demand.
• Woodward (WWD): Supporting localized manufacturing efforts.
• Meritage Homes (MTH): Positioned for growth in domestic construction.

A Resilient US Consumer

Despite ongoing challenges, the US consumer remains a cornerstone of economic growth. Analysts predict another year of resilience, fueled by rising discretionary cash flow and higher savings rates.

The US consumer’s resilience offers a stable foundation for market growth. Look for innovators and market share leaders in discretionary spending categories.

• Burlington Stores (BURL): Thriving in the retail sector.
• Norwegian Cruise Line (NCLH): Benefiting from the travel boom.
• Uber (UBER): Capitalizing on consumer mobility.
• BRX Properties (BRX): Gaining from retail property demand.
• Conagra Brands (CAG): Leveraging innovative consumer products.
• Meritage Homes (MTH): Strong position in residential housing.
• Pinterest (PINS): Engaging consumers through digital platforms.

Archive note

This article preserves the analysis in our weekly newsletter sent 11 January 2025. Market prices, forecasts and company circumstances reflect the time of publication and may have changed.

This material is general information, not personal financial advice or a recommendation to trade. Investing and trading involve risk, including loss of capital.