Making sense of market moves
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Everyone knows the old adage that what goes up must eventually come down. After the S&P 500 soared over 23% in 2024, many investors are understandably worried that the market is frothier than even the sugariest drink on the Starbucks menu.
But most analysts believe that 2025 will be another strong year, even if the market doesn’t soar at the same breakneck pace as it did in 2024. For savvy investors, knowing which areas of the market are poised for growth ahead of time will set you up for another year of great gains.
Here are the industries and sectors that analysts think are going to define the next year:
- Artificial intelligence: You may think the biggest gains of the AI boom are already behind us, but experts argue that might not necessarily be true. After all, we’re only at the beginning of consumer adoption of tools like generative AI. “Massive investment in AI infrastructure, as well as ever more powerful chips and models, are laying the groundwork for increased adoption,” explained BlackRock analysts in their 2025 forward-looking report.
- Utilities: Once again, all roads lead back to AI, and powering energy-hungry data centers will be one of the biggest tasks ahead for big tech giants. “We believe the power and resources field is set for transformational growth, offering significant investment opportunities across power generation, grid infrastructure, and natural resources as the world adapts to increasing electricity demand,” explained UBS analysts in their 2025 outlook report. JP Morgan and Goldman Sachs also both recommend overweighting the Utilities sector.
- Financials: Banks and financial services firms are set to be a major winner of President-elect Donald Trump’s deregulation push, according to JP Morgan’s forward-looking 2025 report.
Zoom out: “We believe AI and geopolitics will remain key themes for 2025, yet there are significant shifts in the underlying policies, demographics, and tech developments that will drive them forward,” explained Jay Jacobs, US Head of Thematic and Active ETFs at BlackRock.—LB