As we close out 2024, a year marked by remarkable gains for equity investors, attention now shifts to the opportunities and challenges of 2025. Year-end outlooks traditionally focus on macroeconomic trends and market forecasts, often heavy with detail and short-term speculation. However, we believe highlighting sustainable, long-term growth opportunities, that extend beyond the immediate horizon, will be most valuable for clients to look through over the holiday period.
Given the S&P 500’s back to back 20%+ year returns, the probability of a market correction in the coming year is significant. Such a correction, however, can present a valuable opportunity for investors to strategically enter or add to positions in these long-term themes at more attractive valuations. With this in mind, we are presenting 7 secular growth themes poised to deliver long-term resilience and recovery, even in the face of volatility. These investment areas are supported by transformative trends that we expect to persist and expand over the next five years (see table above).
While we will take advantage of short-term trading opportunities in sectors like Financials, Industrials, and Small Caps, driven by the policy outlook of a Trump presidency and a Federal Reserve inclined toward rate cuts, our primary focus remains on these long-term secular growth themes, which are essential for enduring wealth creation.
Artificial Intelligence (AI) is revolutionizing industries by driving advanced automation, enhancing data-driven decision-making, and enabling cutting-edge technologies that boost productivity and innovation. Companies harnessing AI are creating smarter services, hyper-personalized experiences, and streamlined operations that set them apart in a competitive landscape.
Top AI Innovators: NVDA (Nvidia), MSFT (Microsoft), META (Meta Platforms), CRM (Salesforce), ORCL (Oracle), TTD (The Trade Desk)
AI in Action:
Sundar Pichai, CEO of Alphabet: “Currently, over 25% of all new code at Google is AI-generated, subsequently reviewed and accepted by human engineers.”
The adoption of cloud computing is supercharging business scalability, agility, and security. By replacing outdated infrastructures, leading cloud providers are empowering enterprises to modernize workflows, accelerate operations, and safeguard data.
Top Cloud Innovators: AMZN (Amazon), NOW (ServiceNow)
Cloud Market Insights:
The global race toward net-zero emissions is igniting investments in renewable energy, electric vehicles, and smart grids. Companies spearheading innovations in clean energy are pivotal to achieving a sustainable future.
Top Green Energy Innovators: TSLA (Tesla), NEE (NextEra Energy), ENR (Siemens Energy)
Innovation Spotlight:
Quantum computing is breaking the boundaries of classical computing, solving problems in cryptography, logistics, and drug discovery that were once considered unsolvable. Companies at the forefront of quantum technology are paving the way for the next computing revolution.
Top Quantum Innovator: GOOG (Alphabet)
Quantum Breakthrough:
The surging demand for AI, 5G, and IoT is driving a renaissance in semiconductor technology. Leading chipmakers are developing cutting-edge processors to fuel the next generation of technological breakthroughs.
Top Semiconductor Innovators: NVDA (Nvidia), AMD (Advanced Micro Devices), AVGO (Broadcom)
Market Demand:
As cyber threats grow more sophisticated, robust cybersecurity solutions are paramount. Companies innovating in cybersecurity are safeguarding critical infrastructure and digital assets against a rapidly evolving threat landscape.
Top Cybersecurity Innovators: CRWD (CrowdStrike), PANW (Palo Alto Networks), ZS (Zscaler)
CrowdStrike Insight:
Emerging markets embracing free-market principles are experiencing accelerated growth and attracting global investments. These dynamic economies offer significant opportunities for investors seeking long-term growth.
Top Emerging Market ETFs: ARGT (Global X MSCI Argentina ETF), INDA (iShares MSCI India ETF)
Key Insights:
