The Trends Investors Can’t Afford to Overlook

We’re excited to share the latest Capital Markets: Observations and Insights report, filled with our latest stock market analysis, presented by Alger CEO and CIO Dan Chung and Director of Market Strategy Brad Neuman, CFA .

Below, we highlight three key observations and themes that we believe may impact investors and their decision-making in 2025.

Understanding Bull and Bear Points

“Will monetary stimulus along with tax cuts and deregulation drive stocks higher, or will lofty investor sentiment combined with trade wars and elevated inflation drag equities down?”

Dan and Brad posed this thought-provoking question in their report, offering a balanced view of bull and bear factors investors should consider in the year ahead. One reason for optimism is lower taxes, which may increase earnings and cash flow, resulting in higher business spending.

Source: FactSet and Tax Foundation.

Among the potential challenges is the potential for trade wars, as higher tariffs could reduce corporate profitability for domestic businesses, while overseas retaliation may hurt exports.

These trends, among others outlined in our Capital Markets report, may shape the market’s trajectory in the years to come.

Source: American Action Forum. Black line indicates median value over data series. Trump 1.0 refers to first Trump presidency when Congress was controlled by Republicans.

What Does an “AI Investment Map” Look Like??

There’s more to investing in AI than just the technology itself. There’s an entire ecosystem of AI enablers and adopters, as shown in the illustration below.?

Source: Alger. Enablers are companies developing the building block components for, and investing in, AI infrastructure such as machinery, hardware, software and services. Adopters are companies that integrate AI into their businesses to enhance their products or services or make their operations more productive.

AI enablers serve as the backbone that provides the infrastructure needed to deliver AI-enhanced products and services. Consider the rising electricity demands from data centers powering AI programs. That’s why we believe energy may bring new investment opportunities for investors.

AI adopters, companies that leverage AI to improve their business and products, are another potential beneficiary of AI. Whether to enhance products and services or facilitate internal efficiencies, AI adopters may drive margin improvement.

For those interested in this topic, take a look at Alger’s Artificial Intelligence Investment Map here to find out some of the main areas within the AI space that we believe are potentially attractive for investors.

Looking Beyond the U.S. Markets

Last but certainly not least, we turn our attention to potentially attractive investment opportunities outside the U.S. Many investors believe the U.S. holds a competitive edge and is uniquely positioned for growth, particularly in areas like technology and innovation. This belief has shaped global equity valuations, resulting in non-U.S. stocks being attractively priced, even when accounting for differences in growth potential.

Source: FactSet as of 12/31/24, Non-U.S. stocks represented by MSCI All Country World Index and U.S. stocks represented by S&P 500 (left). MSCI EAFE includes Europe, Australasia and the Far East; MSCI EM includes 24 Emerging Markets (EM) countries (right).

But having a home country bias is just one factor to consider. Outside the U.S., monetary policy is easing worldwide. There are also industries that are growing rapidly in other countries but not in the U.S., such as banking in Brazil and South Africa, and hospitals in India.

As economic dynamics evolve across global regions, opportunities beyond the U.S. are, in our view, becoming more compelling for investors.

Stay updated with the latest trends in technology and innovation by subscribing to The Alger Recap newsletter. For more market insights, follow Alger on LinkedIn and Instagram, and Alger CEO and CIO Dan Chung on LinkedIn.