It’s that time of year again where stock market forecasters like myself dust off their crystal balls and make predictions about the year 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 said growth stocks would continue to crush value stocks. They did, with growth stocks broadly outperforming value stocks by about 3-to-1 in 2024.
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%.
I called Bitcoin going to $100,000. Of course, it did just that. I said consumers would keep spending and keep the economy turning. They did. I said AI chip stocks outside of Nvidia (NVDA) would rally, and they did, with Broadcom (AVGO), Astera Labs (ALAB), Semtech (SMTC), and Credo Technologies (CRDO) all more than doubling this year.
And I even said nuclear stocks would go nuclear – and they did, with big nuclear stocks like Constellation Energy (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
So… 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.
Without further ado, then, let’s check out my top stock market predictions for 2025.
1: The S&P 500 will rise by more than 20% again next year
The S&P 500 rose more than 20% in 2023 and 2024, marking the first time it has notched back-to-back years of over 20% 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 believe EPS estimates across the S&P 500 will rise by about 10% over the next year, driven by strengthening economic activity. 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 greater than 20% gains for the market.
2: Growth stocks will once again dominate
Growth stocks absolutely crushed value stocks in both 2023 and 2024 – and we think their run of dominance will continue in 2025. Lower interest rates will help growth stocks in 2025. So will more pro-growth and deregulation policies out of Washington D.C. And 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
The hottest theme on Wall Street for the past two years has been AI. We don’t see that changing in 2025. From a big-picture perspective, we are still relatively early in the AI Boom. We view the best analog for the AI Boom as the Dot Com Boom. That lasted from 1995 to 2000. This AI Boom is just wrapping up its second year. We’re at the end of 1996, if you will, of this boom – meaning there’s still a few great years on deck, if the AI Boom continues to follow the trajectory of the Dot Com Boom. We think AI stocks will soar once again in 2025.
4: Speculative tech stocks could have a banner year in 2025
So-called “spec tech” stocks – or early-stage growth stocks that are growing very quickly, but which often are not yet profitable – were laggards in the 2024 stock market rally, until Donald Trump won the Presidency in early November. Since then, spec tech stocks have been running laps around everyone else. We think that continues in 2025. That is because Trump’s pro-growth and deregulation policies mostly benefit smaller technology companies. Indeed, in the first year of Trump’s first presidency, spec tech stocks had a banner year, with many of them more than doubling in 2017. We think spec tech stocks will have another banner year in the first year of Trump 2.0 in 2025.
5: AI Appliers will beat AI Builders
Those who follow our research know that we see the AI Boom having two waves – the AI Builder Boom (where companies build the infrastructure for AI), followed by the AI Applier Boom (where companies develop and deploy AI software applications). For most of 2023 and 2024, we were in the AI Builder Boom. Companies were spending billions upon billions of dollars on creating new AI datacenters, buying new AI chips, securing new AI power, and more. AI Builder stocks – most of which are semiconductor stocks – soared. But since July, AI Builder stocks have struggled amid worries about a slowdown in the AI 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 the AI Applier Boom. We think that shift accelerates in 2025, and we therefore think AI Applier stocks will outperform AI Builder stocks next year.
6: Autonomous Vehicle stocks will soar
We are very bullish on Autonomous Vehicle – or AV – stocks in 2025 because we think this will be the year that we as a society officially enter the Age of AVs. Alphabet’s self-driving unit, Waymo, is already completing over 150,000 fully autonomous rides across San Francisco, Los Angeles, Phoenix, and Austin. They’re launching in Atlanta and Miami in early 2025, and even expanding to Tokyo next year, too. Baidu is operating a self-driving ridesharing network in China that is of similar size. Tesla has unveiled its full self-driving cars – the CyberCab and CyberVan – both which come without a steering wheel or pedals. Aurora plans to launch fully autonomous commercial trucks in early 2025. Uber is testing out autonomous delivery of food via Uber Eats in Phoenix. The Age of AVs has arrived, and we think 2025 will be the year that these AVs start to go mainstream. As they do, we expect AV stocks to soar.
7: eVTOL stocks will take flight
Our favorite “sleeper” stocks for 2024 are eVTOL – or electric vertical takeoff and landing – stocks. Some people call them “flying car” stocks. These companies are making a new type of electric aircraft that is a hybrid of flying cars and helicopters, and which is intended to be used as a medium of hyper-efficient urban transport, shuttling people from the suburbs to downtown or from their neighborhoods to the airport 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 towards commercial launch, 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
We have been vocally and publicly very bullish on quantum computing stocks as some of our favorite early-stage tech stocks for the past few years. Finally, Wall Street started to take notice in late 2024, helped by Google’s big breakthrough with its new quantum Willow chip – which supposedly solved a complex calculation in five minutes that took Google’s fastest supercomputer about 10 septillion years to complete. Aided by that news, quantum computing stocks have soared over the past few months, with a handful of them up more than 1,000% since early September. The rally is overdone in the short-term. But we expect these stocks to stay hot throughout 2025 because we think the quantum computing industry will increasingly move towards 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 towards $200,000 next year. Our technical and fundamental analysis suggests that 2025 will be the last year of this Fourth Crypto Boom Cycle. That does mean we think Bitcoin could crash in 2026 and 2027. But, before it does, we think BTC will charge towards $200,000 in 2025. We are staying bullish on BTC for now.
10: Altcoins will soar in 2025 like they did in 2021
Crypto investors will recall that the best year for the broader crypto markets in recent memory 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 and ~25,000% from CEEK VR. Anyswap, XYO, and Axie Infinity all rose more than 15,000%. Sandbox, Polygon, and Terra all rose more than 10,000%. Solana, Flux, Fantom, Kadena, Telcoin, and BakeryToken all rose more than 5,000%. A ton of altcoins posted major gains in 2021. We think something similar could happen in 2021. Signs have started to emerge which suggest that we are shifting into so-called “altcoin season”, or the part of the crypto boom cycle where altcoins start to outperform Bitcoin. I think we will sprint full-boar into the altcoin season in 2025.
The Final Word
And those, folks, are my 10 big predictions for 2025.
Like I said, last year, most of my 10 big predictions for 2024 came true. And, funnily enough, most of my 10 big predictions for 2023 came true, too.
Can I make it 3-in-a-row?
I think so.
But perhaps my biggest prediction for 2025 is that my new Auspex stock screener will absolutely crush the markets next year.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.