The stock market was closed today (RIP President Carter), but I’m back with a quick note.
We’re just over a week into the new year, and markets are already buzzing with action. Let's orient ourselves by revisiting last year's biggest winners:
A few themes immediately jump out:
AI
Semis
Utilities/Energy
Did I mention AI?
AI has been the dominant investment theme since ChatGPT was released in the Fall of 2022.
Of course, NVIDIA has been the biggest beneficiary, but the “AI trade” has broadened over time. The stocks experiencing the most significant uplift have generally followed this progression:
GPUs and chip design (NVDA 0.00%↑)
FABs (TSM 0.00%↑)
Hyperscalers (cloud providers) MSFT 0.00%↑ GOOG 0.00%↑ AMZN 0.00%↑ META 0.00%↑
Energy and power providers (VST 0.00%↑, GEV 0.00%↑)
Michael Parekh (highly recommend subscribing) created a fantastic graphic breaking down each component of the AI stack:
Based on what I’m hearing from people far smarter than me, here are some of the top AI themes to watch in 2025:
Data centers/power (rather than GPU supply) emerging as key bottlenecks
Synthetic data
Increasing inference compute
Custom ASICs
Hyperscaler capex
Inference-time reasoning
Increased reliance on high bandwidth memory (HBM) providers
If these expert predictions materialize, we can expect investors to stay bullish on investment opportunities in boxes 1-3 shown above.
Now let’s examine early 2025 performance data (small sample size, I know). I pulled YTD returns (as of 1/9) for a selection of stocks tied to the above themes:
For additional context, here’s a snapshot of valuation data for all the above stocks, excluding Nvidia:
Looking Ahead
The million-dollar question: Which stocks are positioned to maintain momentum through 2025?
Time will tell, but for now, "risk-on" sentiment continues to power markets higher.
Disclosure: I own NVDA, CEG, MU, and VRT.