Mark Lyttleton is a business mentor and angel investor with extensive experience of stock market trading. This article will provide an overview of key stock market trends predicted to feature prominently in 2025.
Many market commentators are largely optimistic about the US financial markets throughout 2025, albeit with a healthy dose of caution given the recent strong performance. With global financial markets more intertwined than ever before, US stocks have become more sensitive to a wider range of factors.
In September 2024, the Federal Government lowered interest rates after inflation dipped below 3% in the summer. Some analysts predict continued rate cuts in small increments as inflation falls to 2%. However, some caution that there are risks with this plan if inflation does not continue its recent downward trend. Moomoo Technologies’ Vice President of Strategy Justin Zacks warns of the possibility of stagflation in 2025, suggesting that inflation could persist despite a softening economy and labour market. Zacks cites geopolitical tensions and changing tariff policies as potential catalysts for lingering inflation. Meanwhile, TradingBlock’s Vice President of Market Strategy Michael Martin questions whether the Federal Government’s 2% inflation target is realistic.
Having created some of the best stocks of 2024, the tech industry has been a primary growth driver of markets all over the world in recent years. Take for example the semiconductor company Nvidia (NVDA), which increased its stock price by 178% by monetising demand for high-performance computing resources, establishing its graphics processing units as the resource of choice for machine learning workloads. According to the latest IDC Spending Guide, worldwide spending on AI is on course to reach $632 billion in 2028, effectively doubling thanks to rapid integration of AI, and generative AI in particular. Analysts predict that, throughout 2025 and beyond, markets will continue to respond to further developments in AI.
Ritu Jyoti serves as AI and Data Research Group vice president and general manager for IDC. She predicts that ‘rampant innovations’ in trusted AI technologies and improved harmonisation of human and machine interplay will diminish barriers to AI adoption at scale.
Experts anticipate that software will command the lion’s share of tech spending, representing more than half of the overall AI market. Two thirds of software spending will go to AI platforms and AI-enabled applications, with the rest earmarked for AI system infrastructure software and AI application development and deployment. Spending on AI hardware, including infrastructure, servers and storage, will be the next largest category of tech spending, with IT and business services predicted to see a slightly faster growth rate than hardware with a 24.3% CAGR.
Angelina Hu serves as global head of investor relations for SALT Venture Group. She cites the ongoing economic slowdown in China as creating potential limitations in stock market growth throughout 2025. A sluggish Chinese economy has weakened demand for US exports in the country. Although China’s finance ministry has unveiled plans for a stimulus package, the precise terms of the programme remain unknown. As a result, Hu predicts that companies with significant exposure to China may experience market volatility as the stimulus plan takes shape.
In the US, continuing conflict in the Middle East and even the war in Ukraine have not created huge problems in financial markets. However, according to Justin Zacks, this could all change if geopolitical tensions continue to escalate, disrupting commodities supply and global trade. Another concern is the potential for engagement of US troops on foreign soil, which could temper investor sentiment, taking a toll on stock prices.
Three sectors tipped to feature prominently throughout 2025 are healthcare, energy and technology. Overall, expert predictions for stock market growth in 2025 vary from a 5% decline to a healthy 20% increase. Many analysts are cautiously optimistic, however, pegging a 10% growth rate as the most likely scenario, as it seems to be at the start of every year.