Despite periods of volatility, 2024 has been a good year for many stocks, particularly growth stocks. But what will 2025 look like? Many analysts are becoming more bullish with the prospect of lower corporate taxes and lower interest rates.
At the same time, it’s been a stock picker’s market in 2024 and the same is likely to be true in 2025. That means investors will still want to be selective in the stocks they own.
But this is a time when following the advice of buying the best can pay off. That’s the case with these three sector leaders that are set to deliver solid returns for investors in 2025.
Meta Is Leading in a Critical Stage in the AI Revolution
Artificial intelligence (AI) will continue to be a catalyst for growth stocks in 2025. But investors are becoming more discerning about which AI stocks to buy. That’s because many companies have spent millions, if not billions, on AI and are finding the return on that investment is lacking.
That’s not the case with Meta Platforms (NASDAQ:META). The company has made a significant investment in AI and has sprung into the lead in the way it monetizes that investment. The most significant way Meta accomplishes this is through its digital advertising.
Think of this as a more sophisticated approach to traditional advertising's shotgun versus rifle approach. Meta uses analytics and machine learning algorithms to match ads to user behavior. The company is also exploring ways to monetize AI through its AI services and tools.
This is significant because Meta recently announced it was going to significantly increase its AI spending. That’s why META stock has dropped about 1% since its last earnings report in October 2024. Investors recall the company’s investments in the Metaverse and are concerned about the company going on another spending spree.
However, this time Meta is investing from a position of leadership and growth. Analysts agree and have been raising their price targets on META stock since the report.
1. JPMorgan Is the Best House on the Financial Services Block
Ask analysts about the top sectors for 2025, and finance stocks are likely to come up quickly. Lower interest rates and the likelihood that the Trump administration will loosen the stringent regulations, such as the Basel III Endgame, are all bullish for U.S. banks.
Investors can keep this sector simple and invest in JPMorgan Chase (NYSE:JPM) to find gains in this sector. The stock is up more than 12% in the 30 days ending November 26, nearly double that of the Financial Select Sector SPDR ETF (NYSE:XLF). This just continues the bullish sentiment for JPM stock, which has been in place for most of 2024, as the stock has climbed 47%.
In addition to the likelihood of further stock price appreciation, investors also get a stable dividend that has a 2% yield, currently pays out $5 per share on an annual basis, and has increased that dividend for 14 consecutive years.
2. Exxon Mobil Will Be One of the Big Winners From the Coming Oil Boom
Scott Bessent, President-elect Donald Trump’s nominee for Treasury secretary, recently put a little substance behind Trump’s campaign pledge to “drill baby, drill.” As part of his 3-3-3 plan, Bessent wants to increase U.S. energy production to the equivalent of an additional 3 million barrels of oil per day.
That means it’s time to step on the gas when it comes to oil stocks, and this is another sector where sticking with a leader like Exxon Mobil (NYSE:XOM) is likely to pay off. Many people will argue that XOM stock has performed quite well in the Biden administration. However, much of those gains occurred in 2021 and 2022 and had more to do with a Covid recovery and geopolitical events than with administration policy.
In addition to looking for oil companies to drill more, the Trump administration is likely to lift regulations that will make it easier for them to do so. While it’s fair to say that a company like Exxon Mobil finds it far easier to comply with regulations and may even prefer to see regulations in place to keep out competition, it doesn’t mean they won’t benefit from less regulation.