The year 2024 brought monumental changes in markets and politics. Bitcoin surpassed $100,000, the Fed reduced rates after aggressive hikes, and the S&P 500 soared 23.42% year-to-date. With Donald Trump poised to assume office on January 20 for a second term, here are the key themes likely to shape investor sentiment in 2025:

1. U.S. Inflation and Global Ripple Effects

  • Fed Rate Cuts: The Fed lowered rates by 1%, but inflation remains stubborn, with forecasts for only two cuts in 2025 instead of four.
  • Trump-Fed Dynamics: Potential tension between Trump and Fed Chair Powell could add volatility, especially if tariffs raise inflation.
  • Global Impact: A stronger dollar due to higher U.S. growth risks economic strain in emerging markets with USD-denominated debt.

2. Shift from Semiconductors to SaaS

  • AI Semiconductor Growth Slows: While AI chip revenue hit $71.25B in 2024, tariffs and trade disputes could disrupt global supply chains in 2025.
  • China Retaliation: Restrictions on critical rare metals by China may increase costs for semiconductor firms.
  • Focus on SaaS: As semiconductor growth moderates, SaaS companies, which are less supply-chain-dependent, may attract investor attention.

3. Nuclear Power Revival

  • AI Energy Needs: Nuclear energy emerges as essential for powering AI data centers, with companies like Microsoft and Alphabet turning to reactors.
  • Pro-Nuclear Policies: Trump’s likely policies, including tax cuts and deregulation, could spur nuclear investments.
  • Investor Opportunities: Uranium and nuclear stocks, such as VanEck’s Uranium and Nuclear ETF (NLR), performed strongly in 2024 and could gain further as nuclear adoption accelerates.

The interplay between Fed policies, geopolitical tensions, and AI-driven growth sectors will dominate 2025. Investors should monitor shifts from hardware to software, the impact of pro-nuclear policies, and global economic dynamics shaped by U.S. inflation and trade policies.

This story was originally featured on Tokenist.com