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U.S. voters have picked their next president, which may have prompted you to rethink your portfolio. Learn what factors are in play for stocks in 2025 and meet seven picks that look promising for the new year and beyond.
Top Factors That Will Likely Influence Stocks In 2025
Looking at the factors most likely to influence the financial markets next year, two themes emerge: economic policies implemented by the incoming Trump administration and the evolution and adoption of innovative technologies.
1. U.S. Tariffs and Tax Cuts
U.S. President-elect Donald Trump has promised tariffs and tax cuts to strengthen the U.S. economy. He has suggested tariffs of 10% or more on all imports, with higher duties on Chinese products. Trump may also reduce the corporate tax rate from 21% to 15%.
Any tax cuts will support higher earnings, which is good for shareholders. Tariffs, however, will raise costs for businesses that rely on imported goods. Mark Malek, CIO at financial services firm Siebert, predicts rising costs across several industries, including automotive, consumer electronics, machinery, agriculture, construction, infrastructure and retail.
Higher costs usually get passed along to consumers as higher prices, which can dampen consumer spending. David Bianco, Americas CIO at asset manager DWS Group, sees a different outcome. Bianco believes the benefits of the tax cuts may simply be offset by the cost impact of tariffs.
2. Deregulation
Deregulation is another trend promised by the President-elect.
Clayton Gardner, cofounder and co-CEO of Titan Global Capital, says deregulation will help investment banks, crypto companies, brokerages and asset managers—providing more “pricing flexibility” while minimizing red tape. Metals and minerals companies in the U.S. would also “see more room for production growth,” according to Gardner.
Bianco adds that deregulation paired with tax cuts should also benefit tech stocks, energy-intensive companies and utilities.
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3. Fed Monetary Policy
Many expect the Fed to continue lowering interest rates in 2025. Robert R. Johnson, CEO of Economic Index Associates, cites the Fed Watch Tool by derivatives marketplace CME Group. The tool quantifies interest rate sentiment based on Fed funds futures contracts. The consensus, with a nearly 60% probability, is that interest rates will drop by at least 75 basis points before the end of 2025.
Lower interest rates are good for stocks because they make debt cheaper and promote consumer spending. According to Johnson, the automotive, apparel and retail sectors have historically outperformed when rates are falling.
4. Blockchain And Cryptocurrencies
Blockchain is the backbone technology for cryptocurrencies. It is a distributed ledger system that was first applied to support Bitcoin. Today, blockchain is also used to secure data and enhance efficiency in finance, logistics, government, real estate and more.
Julia Khandoshko, CEO at broker Mind Money, believes blockchain and cryptocurrencies will be broadly influential next year. “The year 2025,” Khandoshko explains, “may be a turning point for their integration into traditional economic processes.”
Greater adoption of blockchain and digital currencies will benefit chipmakers, crypto exchanges and crypto mining companies.
5. Automation And AI Technology
Big tech stocks are on pace to spend $200 billion on artificial intelligence (AI) in 2024. The investments should bring automation and machine learning capabilities to a much broader audience—and deliver quantifiable business results. According to Arron Bennett, financial strategist and CFO of Bennett Financials, effective AI implementations will serve “as a catalyst for transformation in business operations and financial performance.”
Beneficiaries will be early AI adopters, cloud computing providers and high-computing software and hardware companies.
7 Best Stocks To Buy And Invest In 2025
While most of the factors noted above have positive implications, there is always the chance for negative surprises. Rising prices due to tariffs, for example, could slow expected interest rate reductions. For this reason, my best stock picks are limited to large-caps—which can more easily absorb economic upsets than smaller companies.
The table below identifies seven large-cap stocks poised to profit in 2025. Note that I own Microsoft shares as a long-term position. Metrics are sources from stockanalysis.com.
Table data source: Stockanalysis.com.
1. Microsoft (MSFT)
- Stock price: $415.29
- Trailing 12-month (TTM) revenue: $254 billion
- TTM diluted EPS: $12.11
- 5-year EPS growth outlook: 17.4%
- Dividend yield: 0.80%
Microsoft Business Overview
Microsoft provides cloud computing services and productivity software for individuals and businesses. The company also provides gaming hardware and software via the Xbox platform and operates the business networking website LinkedIn.
Why MSFT Stock Is A Top Choice
Microsoft holds the second-largest market share in cloud computing, generating $24.1 billion in revenue from its Intelligent Cloud business last quarter. The tech giant’s cloud offering supports AI and blockchain development with specialized tools like the Azure Blockchain Development Kit and Microsoft Azure AI Foundry. If AI and blockchain development activity continues to have momentum, Microsoft will benefit.
Analysts are bullish on Microsoft, too. The consensus price target of $503.43 represents upside of nearly 22%.
2. MetLife (MET)
- Stock price: $82.60
- TTM revenue: $71 billion
- TTM diluted EPS: $4.92
- 5-year EPS growth outlook: 38.3%
- Dividend yield: 2.6%
Metlife Business Overview
Metlife offers insurance and annuities. The company also provides employee benefits and asset management services. Customers include individuals and businesses in more than 40 markets around the world.
Why MET Stock Is A Top Choice
Bradley Flowers, founder of Portal Insurance, believes Trump’s economic policies could lower costs for insurance companies, according to an interview with Insurance Business magazine. Flowers also predicts Trump’s tax cuts could fuel interest in entrepreneurship, which would in turn raise demand for business insurance.
MetLife is well-positioned to leverage lower costs and stronger interest in small business solutions. The company is one of the largest insurers in the U.S. and offers a suite of small business products.
Analysts rate MET a strong buy. The consensus price target of $89.17 represents about 4.5% upside.
3. Mastercard (MA)
- Stock price: $512.54
- TTM revenue: $27 billion
- TTM diluted EPS: $13.23
- 5-year EPS growth outlook: 17.5%
- Dividend yield: 0.51%
Mastercard Business Overview
Mastercard provides transaction processing and payment-related services in more than 200 countries and territories. Customers include individual cardholders, businesses and government agencies.
Why MA Stock Is A Top Choice
Trump may eliminate income taxes on Social Security, tips and overtime pay. Those moves would likely fuel consumer optimism and promote spending, particularly if interest rates are also declining. Mastercard, as a payment processor, makes more as people spend more.
Mastercard is also investing in blockchain and cryptocurrency solutions. As an example, Mastercard Crypto Credential went live earlier in 2024. The service verifies crypto transactions across multiple currencies and blockchains. Mastercard is also developing the Mastercard Multi-Token Network, built on its private blockchain, to support smart contracts and automated escrow processes, among other things.
Analysts rate Mastercard a strong buy. The consensus price target is $552.75, which is 7.3% higher than the stock’s current value.
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4. Chevron (CVX)
- Stock price: $161.33
- TTM revenue: $191 billion
- TTM diluted EPS: $9.06
- 5-year EPS growth outlook: 5.3%
- Dividend yield: 4.0%
Chevron Business Overview
Chevron explores, develops and produces oil and natural gas. The company also refines crude oil and markets fuels and lubricants through its Texaco, Chevron and Caltex brands.
Why CVX Stock Is A Top Choice
The Trump administration will be favorable to the oil and gas industry. According to Forbes contributor Robert Rapier, the President-elect has promised several actions to boost oil and gas production. Among these are the expansion of drilling on public lands and making offshore federal lands available for oil and gas leasing.
Under a lighter regulatory load, Chevron would likely increase exploration and, potentially, acquisition activities, too. Chevron also offers investors an incentive to wait for these changes to boost earnings—the company pays an ample and growing dividend.
Analysts rate Chevron a buy with a consensus price target of $174.27. The target is about 7.8% above CVX’s current value.
5. Advanced Micro Devices (AMD)
- Stock price: $137.60
- TTM revenue: $24 billion
- TTM diluted EPS: $1.13
- 5-year EPS growth outlook: 83.1%
- Dividend yield: NA
Advanced Micro Devices Business Overview
AMD is a fabless semiconductor company, meaning it designs but does not manufacture its chips. The product set includes graphics processing units, chipsets and semi-custom system-on-chip products for the data center, gaming and PC markets.
Why AMD Stock Is A Top Choice
AMD is a smaller competitor to AI darling Nvidia. The company has been working to establish itself as the second-most dominant high-performance chip provider.
AMD’s momentum has been mixed. Last quarter, the company reported revenue growth of 18%, gross margin expansion of 3 percentage points and net income growth of 158%. After the earnings release, however, AMD announced layoffs. Officially, the 4% staff reduction was intended to refocus resources on the company’s “largest growth opportunities.”
Presumably, those growth opportunities are in blockchain and AI. AMD processors are currently used in both types of applications. As an example, blockchain interoperability platform Wormhole uses AMD hardware accelerators. AMD is also in the process of launching its Instinct M1325X chip, which could be a competitor to Nvidia’s Blackwell chip.
Analysts rate AMD a strong buy. The average price target of $195.77 equates to an upside of more than 42%.
6. Coinbase (COIN)
- Stock price: $320.01
- TTM revenue: $5 billion
- TTM diluted EPS: $5.55
- 5-year EPS growth outlook: 77.9%
- Dividend yield: NA
Coinbase Business Overview
Coinbase operates the world’s largest cryptocurrency exchange where customers can buy and sell over 200 currencies. The company generates revenue primarily from trading fees and subscription fees. Coinbase operates in more than 100 countries and safeguards $273 billion in assets.
Why COIN Stock Is A Top Choice
After a long dry spell, Bitcoin, the original cryptocurrency, has set multiple new highs this year—doubling its value since January. The activity has been good for Coinbase, whose user-friendly exchange is a popular first choice for new crypto buyers.
The Trump administration will likely create a more favorable regulatory environment for cryptocurrencies and crypto traders. Already, Trump has proposed launching a strategic national crypto stockpile and appointing a crypto czar within his administration.
Analysts rate Coinbase a buy. The consensus price target, however, is $248.40—which is lower than COIN’s current trading price.
7. General Motors (GM)
- Stock price: $55.47
- TTM revenue: $182 billion
- TTM diluted EPS: $9.25
- 5-year EPS growth outlook: 1.6%
- Dividend yield: 0.86%
General Motors Business Overview
GM makes and sells trucks, cars and auto parts and provides auto financing. The company’s vehicle brands include Buick, Cadillac, Chevrolet and GMC. Customers are individuals, rental car companies, commercial fleets, leasing companies and governments.
Why GM Stock Is A Top Choice
Falling interest rates are usually good for automakers. Consumers tend to favor larger purchases when the cost of financing them has declined.
GM may also benefit from price-raising tariffs that could be levied on imported vehicles. As well, the President-elect has said he would limit government support for electric vehicles (EV) and reduce emissions standards for combustion engines. Both developments would be positive for GM and other domestic automakers that specialize in gas-powered cars.
Analysts rate GM a buy with a consensus price target of $58.91.
Bottom Line
In the few short weeks since Trump’s election win, the S&P 500 is up nearly 3%. That’s a strong sign investors are optimistic about the President-elect’s pro-business economic agenda.
Still, there are no slam-dunks when it comes to the economy or the financial markets. Invest in tech, financials, gas and domestic manufacturers to take advantage of the incoming administration’s policies—but stay diversified in case things don’t go as planned.
Disclosure: I own shares of Microsoft.
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