As 2024 comes to a close, the investing landscape has undergone profound shifts shaped by technology, politics, and global events. This year saw AI reach new pinnacles, geopolitical conflicts reshape industries, and political events send ripples across markets. Further, quantum computing emerged as a mighty force, and Bitcoin began to evolve into a strategic reserve asset for businesses. As we approach 2025, I believe these trends will persist, driving continued innovation and growth while potentially bringing significant volatility. So, let’s look deeper into the five key trends that defined 2024 and will likely keep influencing the year ahead.
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AI’s Tremendous Impact on Tech Stocks
Remember when AI was just a buzzword about two years ago? Back then, AI seemed more like a word management team used in earnings calls to sound innovative and boost investors’ excitement. But fast forward to 2024, and AI has fully changed the game. It’s clear that it’s not just hype anymore but a real, tangible driving force of productivity and growth across industries, particularly in tech. Companies like Microsoft (MSFT), Meta (META), and Alphabet (GOOGL)(GOOG), which started to harness AI to optimize their operations, are reaping remarkable rewards that have propelled their growth.
Microsoft, for instance, saw its Azure cloud division achieve exceptional growth after integrating OpenAI’s models into its platform. In its latest Q3 results, Microsoft posted a 26% year-over-year increase in cloud revenue, much of which was attributed to increased demand for AI-powered services. Meta capitalized on AI by improving its advertising algorithms and content delivery, driving up user engagement and overall advertising efficiency. Alphabet followed suit, integrating AI tools into Google Search and its productivity software, leading to robust advertising revenue growth and higher adoption of Google Workspace.
As we head toward 2025, I think this trend will persist as these tech giants and others, like Nvidia (NVDA) and Amazon (AMZN), continue investing heavily in AI. With rapid advances in generative AI, automation, and data analytics, businesses are finding more opportunities to leverage AI, which should fuel enduring momentum for tech stocks.
Geopolitical Issues and the Wars in the Middle East and Ukraine
The Middle East and Ukraine wars significantly impacted oil and defense stocks throughout 2024. Rising global tensions drove demand for energy resources and military equipment, benefiting companies such as Lockheed Martin (LMT) and Northrop Grumman (NOC), which saw their share prices surge. However, oil prices remained somewhat muted throughout the year as improved global supply chains and slower-than-expected demand growth offset geopolitical disruptions. Companies like ExxonMobil (XOM) and Chevron (CVX) underperformed the overall market despite remaining profitable.
And yet, the landscape has shifted following Donald Trump’s election victory on November 5th. President Trump has stressed restoring geopolitical stability, providing investors with optimism for a more peaceful outlook in 2025. Coupled with the upcoming establishment of the “Department of Government Efficiency” (DOGE), which should focus on curbing unnecessary government spending, concerns about long-term defense expenditures arose. This change in sentiment has caused defense stocks to retreat from their recent highs as investors have already begun pricing in lower revenues for defense contractors in a more peaceful, cost-conscious environment. This trend is thus likely to endure next year.
Trump’s Election Had an Outsized Effect on the Stock Market
Apart from my earlier point about the potential of a more peaceful world and its mark on defense stocks, Donald Trump’s reelection has undeniably left a profound mark on the broader stock market. Following his re-election in early November, markets have surged in response to heightened investor optimism surrounding his pro-business agenda. The rally is still going strong today, fueled by hopes for corporate tax cuts, fewer regulations, and a fresh focus on improving domestic productivity.
Investor morale in the United States seems to be at record highs, with both the S&P 500 and Nasdaq hitting new records by the day. One could argue that the market is frothy. Then again, Trump’s policies, which are expected to prioritize economic growth and domestic manufacturing, have instituted a bullish outlook for many sectors. Analysts point to improved job growth projections and tax incentives for businesses as key factors driving this market boom.
As a result, I wouldn’t be surprised if this trend persists through 2025 as Trump’s administration seeks to deliver on its promises. The blend of policy-driven economic stimulus and growing business confidence positions the U.S. stock market for sustained gains in the short-to-medium term, supported by optimism among investors.
Quantum Computing Was a Big Deal!
Quantum computing, once a distant technological dream, saw notable progress in 2024, with significant breakthroughs capturing headlines. One of the most exciting moments this yearwas Google’s reveal of its latest breakthrough in quantum computing. A few days ago, it introduced Willow—a quantum system that can solve problems exponentially faster than traditional supercomputers. In fact, Google’s Willow quantum chip solved a 10-septillion-year problem in under five minutes! Imagine what this could mean for the pharma, cybersecurity, and logistics industries.
Other major players, like IBM (IBM) and Intel (INTC), also showed progress in quantum hardware and software, further fueling excitement in the sector. It’s all undoubtedly early and speculative, but it also seems like a glimpse into the future! With quantum innovation accelerating, it’s reasonable to assume that 2025 will be another transformative year.
The Birth of the Concept of BTC as a Strategic Reserve
Bitcoin has seen a meteoric rise in popularity throughout 2024, powered by regulatory advancements and growing institutional adoption. A pivotal moment was the launch of BlackRock’s Bitcoin ETF (IBIT), which legitimized BTC as a mainstream asset class and has since recorded tremendous capital inflows. Progress in regulation has provided a clearer framework for institutional investors, boosting confidence in BTC as a widely accepted store of value.
I think the most intriguing outcome of this development is how Bitcoin has emerged as a strategic reserve asset. MicroStrategy (MSTR) has led the charge, continuing to amass BTC on its balance sheet, which has resulted in exceptional share price gains. Following MicroStrategy’s success, companies like Semler Scientific (SMLR), Riot Platforms (RIOT), and Marathon Digital (MARA) have started to copy this strategy. While Microsoft’s shareholders recently voted against adding Bitcoin to the company’s reserves, the concept has certainly gained significant traction. I would argue that it is only a matter of time before a large corporation begins to adopt BTC reserves, potentially triggering a domino effect across the market.
Conclusion
This year’s investing trends reflected a dynamic period shaped by relentless innovation, geopolitical shifts, and notable political developments. AI’s dominance in tech, the geopolitical influence on defense and oil stocks, Trump’s election-driven market optimism, quantum computing’s breakthroughs, and the rise of Bitcoin as a strategic reserve all made waves this year.
As we head into 2025, I believe that these trends are expected to continue evolving, offering investors both opportunities and challenges, depending on which side of the trade they choose to position themselves on. So, stay informed and make thoughtful investing decisions, but don’t forget to enjoy the holiday season and focus on the moments that matter most these days of the year!
