Stock market outlook: 5 Best stocks to invest in 2025

The stock market outlook is based on the factors most likely to influence the financial markets next year, learn what factors are in play for stocks in 2025 and meet 5 Best stocks to invest in 2025.

Key Factors Likely to Influence Stocks in 2025

As we look ahead to 2025, two primary themes are expected to significantly impact financial markets: the economic policies of the incoming Trump administration and the ongoing evolution and adoption of innovative technologies.

1. U.S. Tariffs and Tax Cuts
President-elect Trump’s proposed tariffs of 10% on imports, particularly from China, alongside a corporate tax cut from 21% to 15%, aim to boost the economy. While tax cuts may enhance earnings, rising costs from tariffs could offset these benefits, potentially dampening consumer spending, according to analysts.

2. Deregulation
Deregulation is a key promise from the President-elect, aimed at fostering growth across various sectors. Clayton Gardner, cofounder and co-CEO of Titan Global Capital, believes that removing regulatory barriers will benefit investment banks, crypto firms, brokerages, and asset managers by providing greater pricing flexibility and reducing red tape.

3. Fed Monetary Policy
Many expect the Fed to lower interest rates in 2025, with a nearly 60% probability of a 75 basis point cut, according to the CME Group's Fed Watch Tool. Lower rates benefit stocks by reducing borrowing costs and boosting consumer spending, particularly in the automotive, apparel, and retail sectors.

4. Blockchain and Cryptocurrencies
Blockchain serves as the foundational technology for cryptocurrencies, originally developed to support Bitcoin. This distributed ledger system has since expanded its applications beyond digital currencies, enhancing security and efficiency across various sectors, including finance, logistics, government, and real estate. Its versatility makes blockchain a pivotal technology in today’s digital landscape.

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 maintains the second-largest market share in cloud computing, with its Intelligent Cloud division generating $24.1 billion in revenue last quarter. The company’s cloud services facilitate AI and blockchain development through specialized tools such as the Azure Blockchain Development Kit and Microsoft Azure AI Foundry.

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%

Bradley Flowers, founder of Portal Insurance, believes that Trump’s economic policies could reduce costs for insurance companies, as stated in an interview with Insurance Business magazine. He also anticipates that Trump’s tax cuts may spur interest in entrepreneurship, leading to increased demand for business insurance. As one of the largest insurers in the U.S., the company offers a comprehensive range of products tailored for small businesses.

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%

Trump may propose eliminating income taxes on Social Security, tips, and overtime pay. Such changes could boost consumer confidence and encourage spending, especially in a declining interest rate environment. As a payment processor, Mastercard benefits from increased consumer spending. Analysts have rated Mastercard a strong buy, with a consensus price target of $552.75, representing a 7.3% increase from the stock's current value.

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%

With a lighter regulatory burden, Chevron is likely to ramp up exploration and possibly pursue acquisition opportunities. Additionally, the company provides a compelling reason for investors to be patient as these changes unfold, thanks to its generous and steadily increasing dividend. Analysts have rated Chevron a buy, with a consensus price target of $174.27, which is approximately 7.8% higher than 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

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. Presumably, growth opportunities lie in blockchain and AI, sectors where AMD processors are already employed. For instance, the blockchain interoperability platform Wormhole utilizes AMD hardware accelerators. Additionally, AMD is preparing to launch its Instinct M1325X chip, positioning it as a competitor to Nvidia's Blackwell chip.

Conclusion

The stock market outlook for the upcoming year presents both opportunities and challenges. As we analyze the key factors expected to influence financial markets in 2025, it becomes clear that economic policies, regulatory changes, and technological advancements will play significant roles. Understanding these dynamics is crucial for investors.

However, there are no guarantees when it comes to the economy or financial markets. Consider investing in technology, financials, energy, and domestic manufacturers to capitalize on the incoming administration's policies, but maintain a diversified portfolio to protect against unexpected outcomes.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.