Stock market outlook: 5 Best stocks to invest in 2025

The stock market outlook is based on the factors most likely to influence the financial markets next year, learn what factors are in play for stocks in 2025 and meet 5 Best stocks to invest in 2025.

Key Factors Likely to Influence Stocks in 2025

As we look ahead to 2025, two primary themes are expected to significantly impact financial markets: the economic policies of the incoming Trump administration and the ongoing evolution and adoption of innovative technologies.

1. U.S. Tariffs and Tax Cuts
President-elect Trump’s proposed tariffs of 10% on imports, particularly from China, alongside a corporate tax cut from 21% to 15%, aim to boost the economy. While tax cuts may enhance earnings, rising costs from tariffs could offset these benefits, potentially dampening consumer spending, according to analysts.

2. Deregulation
Deregulation is a key promise from the President-elect, aimed at fostering growth across various sectors. Clayton Gardner, cofounder and co-CEO of Titan Global Capital, believes that removing regulatory barriers will benefit investment banks, crypto firms, brokerages, and asset managers by providing greater pricing flexibility and reducing red tape.

3. Fed Monetary Policy
Many expect the Fed to lower interest rates in 2025, with a nearly 60% probability of a 75 basis point cut, according to the CME Group's Fed Watch Tool. Lower rates benefit stocks by reducing borrowing costs and boosting consumer spending, particularly in the automotive, apparel, and retail sectors.

4. Blockchain and Cryptocurrencies
Blockchain serves as the foundational technology for cryptocurrencies, originally developed to support Bitcoin. This distributed ledger system has since expanded its applications beyond digital currencies, enhancing security and efficiency across various sectors, including finance, logistics, government, and real estate. Its versatility makes blockchain a pivotal technology in today’s digital landscape.

1. Microsoft (MSFT)

Recent News: Microsoft has been doubling down on AI innovation, aiming to reduce dependency on OpenAI and lower costs by exploring other AI technologies. They've also faced scrutiny from the FTC but continue to strengthen their AI portfolio with new partnerships and tech advancements.

Stock Price: As of late December 2024, MSFT trades at $439.33, with a slight decline of 2.6% over the past month.

Prediction: Analysts are highly optimistic with an average price target of $509.4 for the next 12 months, suggesting a potential 15.95% increase. The stock's "Strong Buy" consensus reflects confidence in Microsoft's AI and cloud expansion.

2. MetLife (MET)

Recent News: MetLife has been focusing on enhancing its digital capabilities, introducing new insurance products, and expanding in Asia-Pacific. They've also announced a strategic review of their U.S. business to streamline operations.

Stock Price: MET's current price is around $81.25, showing a modest increase over the past month.

Prediction: Analysts maintain a "Hold" rating on MET with a price target averaging at $85. This indicates a cautious optimism, with expectations of moderate growth driven by digital transformation and international expansion.

3. Mastercard (MA)

Recent News: Mastercard has been advancing into new payment technologies, including blockchain and AI for fraud prevention. They've also expanded their network partnerships globally, enhancing their service offerings.

Stock Price: MA is trading at approximately $440, reflecting a stable performance with a slight uptick.

Prediction: With a "Buy" recommendation from analysts, the price target for MA is set at around $500, suggesting a 13.6% potential rise. This optimism stems from Mastercard's strategic investments in technology and global market expansion.

4. Chevron (CVX)

Recent News: Chevron has been in the news for its acquisition of Hess, aiming to bolster its oil reserves. They're also focusing on LNG expansion and sustainable energy solutions.

Stock Price: CVX stock is currently at $175, up from recent months, reflecting positive market sentiment.

Prediction: Analysts rate CVX as a "Buy" with a price target of $200, indicating a nearly 14% potential increase. This optimism is based on expected oil price rises and strategic acquisitions improving Chevron's long-term outlook.

5. Advanced Micro Devices (AMD)

Recent News: AMD has been making headlines with its advancements in AI chips and data center solutions, positioning itself against competitors like Nvidia. There's been buzz around their new GPU releases and partnerships.

Stock Price: AMD's stock price stands at $120, with significant volatility due to tech sector dynamics.

Prediction: Analysts predict a positive trajectory with a price target around $150, suggesting a 25% growth potential. This is largely due to AMD's aggressive push into AI and expected market share gains in computing technologies.

Conclusion

The stock market outlook for the upcoming year presents both opportunities and challenges. As we analyze the key factors expected to influence financial markets in 2025, it becomes clear that economic policies, regulatory changes, and technological advancements will play significant roles. Understanding these dynamics is crucial for investors.

However, there are no guarantees when it comes to the economy or financial markets. Consider investing in technology, financials, energy, and domestic manufacturers to capitalize on the incoming administration's policies, but maintain a diversified portfolio to protect against unexpected outcomes.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.