Where To Invest in 2025

Five Key Themes To Watch

The past two years have offered investors incredible returns as the S&P 500 has returned a cumulative 53%! But can this bull run continue through next year?

Financial analysts think so, with some brokerage houses putting estimates on the S&P 500 as high as 7,000. But financial experts are notoriously wrong, it was only two years ago when the majority called for a recession in 2023 that never materialized. (see my article from two years ago)

While nobody can predict the future, we can intelligently position our portfolios to benefit from several key themes evident in 2025.

Here they are…

1) The Next Stage of the AI Supercycle

Over the past two years, the AI narrative has been largely driven by the “picks and shovels” of the tech gold rush: companies like Nvidia and Supermicro that built the critical hardware infrastructure. These stocks surged, reflecting the market’s recognition that advanced AI solutions begin with robust, high-performance computing foundations.

As we approach 2025, the AI ecosystem is evolving. Much of the core infrastructure — the physical servers and accelerated chips — has been deployed, at least in the early stages. The next phase of growth is shifting toward companies that enable AI’s operationalization and refinement.

In 2025, investors will move beyond Nvidia to businesses situated further in the development process.

Check out Astera Labs (ALAB) which focuses on connectivity and data bottleneck reduction inside data centers, making it easier for workloads to flow seamlessly through complex compute fabrics. Or Innodata (INOD) for data preparation, annotation, and enrichment. Companies like Rubrik (RBRK) specialize in cloud data management and backup solutions, ensuring that the valuable datasets feeding AI models are secure, accessible, and compliant with regulatory requirements.

Additionally, we’ve seen Broadcom (AVGO) and Marvel (MRVL) explode higher after reporting earnings. These companies supply networking, storage, and connectivity solutions that support data center scaling.

The AI theme is not going anywhere in 2025, but the investment strategy may shift. Keep watch on earnings to see how companies adapt to this revolution in technology.

2) Increased Volatility

Just last week, we saw volatility spike 75% after a single FOMC press conference. It’s a stark reminder that the calm conditions that accompanied the recent bull market may be harder to come by. Even top asset managers like KKR believe elevated volatility is here to stay through 2025, and I’m inclined to agree.

How should investors respond? One strategy is to increase exposure to defensive stocks — think Procter & Gamble (PG), Coca-Cola (KO), and Kimberly-Clark (KMB). These consumer staples juggernauts have steady cash flows, strong brands, and less sensitivity to economic turbulence. They serve as a safe haven for investors looking to weather the storm, offering a measure of stability even if market conditions turn choppy.

3) America’s Continued Energy Dominance

America’s energy sector is more dominant than ever — achieved despite recent regulatory headwinds (see Keystone, Alaska). With the Trump administration back in the driver’s seat and Energy Secretary nominee Chris Wright at the helm, we should see a more favorable environment for the energy sector.

That being said, the energy sector tends to benefit from high oil prices and low regulation increases supply and decreases prices. So rather than just buying ExxonMobil or Chevron, think of increased support for domestic drilling, streamlined pipeline approvals, and accelerated development of next-generation nuclear technologies.

I’d recommend focusing on midstream operators like Enterprise Products Partners (EPD) and Kinder Morgan (KMI). These companies earn stable, fee-based revenue by moving hydrocarbons from point A to point B — perfect for a scenario where domestic production is encouraged, but oil prices remain moderate. They’re the toll roads of the energy world, and more volume means more cash flow.

Beyond oil and gas, there’s a wave of interest in securing U.S. supply chains for critical minerals — like rare earths and lithium — integral to energy storage and electrification. MP Materials (MP) stands out as a key player in domestic rare earth production. And a couple of smaller players that I’ve been watching: US Antimony (UAMY) and Perpetua Resources (PPTA).

4) Financial De-Regulation & Crypto

Similar to the energy sector, regulations around fintech and cryptocurrency have been hefty in the previous four years and the incoming administration has promised to be pro-crypto and slash regulations.

After Trump’s electoral victory, all cryptocurrency-related stocks and Bitcoin itself increased dramatically (see the Global X Blockchain ETF,
BKCH). Fintech providers like Square (SQ), SoFi (SOFI), Affirm (AFRM) all shot up as well.

This trend will likely continue and the tailwinds of a pro-crypto president and de-regulation efforts will benefit these companies.

5) The Reign of Google

Alphabet, Google’s parent company, has lagged some of the Magnificent 7 high flyers in recent years but I believe 2025 could be the year Alphabet finally takes center stage.

First, AI. Google’s investment in AI through its 2014 acquisition of DeepMind is paying dividends. While it initially seemed like OpenAI and others had pulled ahead, Google’s recent model release of Gemini is very impressive and showing promise to take the lead in the AI race. Additionally, their AI video generator (Veo 2) is remarkably better than OpenAI’s Sora engine.

Next, autonomous driving. I first highlighted Waymo’s potential back in 2020 and now they have completed over 5 million driverless rides. As Waymo scales, it could transform transportation as we know it. This is a business unit that currently carries little to no weight in Google’s valuation and I beleive that will change in the coming years.

Then there’s YouTube. Cord cutting is accelerating, and streaming providers are competing for eyeballs. YouTube is emerging as a dominant platform — not just for entertainment, but for education and information. I know multiple people who rely on YouTube as their primary content source.

Add these factors together (and some quantum computing!) and you get a company that’s firing on all cylinders. With search and advertising as a foundation, and high-growth engines like AI and Waymo revving up, it’s hard to see a scenario in which Google loses in 2025.

The future is never certain. Expert predictions are often off the mark, and Black Swan events have a way of humbling everyone. But by focusing on these emerging and enduring themes, we can tilt the odds in our favor.

Happy investing! 🎉

This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult a licensed financial advisor before making investment decisions.