No getting around US stocks in 2025: an overview of the advantages and risks

• Experts remain bullish on US stocks
• Market remains interesting for stock pickers
• Tariffs represent major unknowns

Experts recommend US stocks

Geopolitical tensions, such as Russia’s ongoing war against Ukraine or the escalating situation in the Middle East, have so far hardly been able to slow down the upward trend on the stock markets. Interim setbacks that pessimists interpreted as the end of the bull market always turned out to be short-term. Investors’ buying interest remained stable even after temporary price corrections.

And so the bull market continued in 2024 despite numerous challenges and skeptical voices.

However, how long a bull market typically lasts is also controversial among experts – estimates vary between four and seven years. But one thing seems clear: many experts are convinced that the current bull market has not yet reached its peak and the rally could continue in 2025.

As MarketWatch reports, analyst teams at Deutsche Bank, Goldman Sachs, UBS, Barclays, Société Générale and JPMorgan are advising investors to focus on the US in the new year, although some of them do not rule out potential in international markets.

“TINA”: opportunities and risks

Many experts see a possible shift in market leadership as an opportunity for investors, as the focus could increasingly shift from the dominant tech stocks of recent years to other sectors such as financials and utilities. According to Dubravko Lakos-Bujas, head of the global markets strategy group at JPMorgan, these sectors could benefit from the development.

While Lakos-Bujas also considers Japanese stocks to be attractive, he sees less potential in them Eurozone and the emerging countries. At the same time, however, there are risks even in the USA: the high valuations of leading companies, political uncertainty in Washington and rising government bond yields could put the markets under pressure. Nevertheless, the strong US economy and technological progress, particularly through artificial intelligence, remain a decisive advantage for US stocks.

“The political situation could cause turbulence in 2025, but the opportunities outweigh the risks,” said Lakos-Bujas.

In this context, Albert Edwards from SocGen also took up the once popular acronym “TINA” (“there is no alternative”) to describe the market mood: US stocks still seem to have no alternative. Despite high valuations, confidence remains due to strong profit expectations.

Many optimistic Wall Street strategists also emphasize the advantages of leading US companies. Impressive earnings growth could further boost prices. “Earnings expectations in the US are quite healthy,” said Venu Krishna, chief US equity strategist at Barclays, according to MarketWatch.

While Big Tech continues to drive most of the growth, the rest of the market is also slowly showing progress. “The earnings strength remains with Big Tech, but other companies are also developing, albeit more slowly than expected,” said Krishna.

Technical exceptionalism

In addition, the US remains the center of technological innovation, and this “technical exceptionalism” ensures that US markets continue to have a leading position, MarketWatch continued. While the country pioneered the Internet in the past, it is now at the forefront of trends such as artificial intelligence and cloud computing. Despite uncertainties about the short-term profitability of AI investments, experts expect long-term productivity gains that could further increase the profitability of U.S. companies.

Friendly environment for stock pickers

In addition, the new Trump administration’s pro-business policies – with tax cuts and deregulation – could further boost corporate profits and strengthen the economy through higher government spending. This means the market remains particularly interesting for stock pickers who are specifically looking for growth opportunities.

JPMorgan’s Dubravko Lakos-Bujas also believes that uneven performance across sectors, styles, themes and countries could create a market that is particularly attractive to investors who make targeted stock selections.

This dynamic was already evident in the second half of 2024 as more sectors participated in the rally. Financial stocks even overtook the technology sector, supported by expectations of Trump’s deregulation plans.

Tariffs or no tariffs?

According to Morningstar, the imposition of tariffs in 2025 remains a big unknown and could have significant impacts on companies, the overall economy and the Financial markets have. What will be crucial here will be which tariffs are actually implemented, which regions and products they target and which goods may be exempt. Companies that rely heavily on imports could see their profit margins under pressure due to limited ability to pass on additional costs to customers. The valuation of such companies will depend on how strong and long-lasting this pressure is.

At the same time, companies that predominantly purchase domestic goods or goods not affected by tariffs could benefit from this. Likewise, firms with strong pricing power could easily pass on the additional costs and increase their profits despite small declines in sales.

Editorial team finanzen.net

This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.