Goldman's favorite themes for the stock market in 2025 and how to play them

Published Fri, Jan 3 202510:01 AM EST

Goldman Sachs is keeping some market themes in mind into the new year. Stocks are coming off an unusually strong two-year period, with 2023 and 2024 both recording gains of more than 20% for the broad S & P 500 index. Now, investors are wondering if the bull market has further steam. There's a lot to consider with the potential for more interest rate cuts and a change of party control in Washington. The average target set by market strategists suggests the S & P 500 can rise nearly 13% in 2025, according to CNBC Pro's survey available exclusively for subscribers. In a note to clients, Steven Kron, director of Americas equity research, laid out the five trends his team will be keeping an eye on in 2025. He also offered stocks from the firm's conviction list to play each: Artificial intelligence The promise of AI is one of the defining investing ideas yet again, Kron said. "The markets arguably depend upon the AI theme sustaining through 2025 for stock indices to work," he said. However, he said the focus may shift from infrastructure to platforms and applications. Meanwhile, he said there should be a transition within enterprise technology spending to conventional software applications as AI takes up a little less oxygen in the business world. Within the firm's conviction list, he pointed to well-known stocks Nvidia and Snowflake , as well as the more under-the-radar Teradyne and Sempra , as ways to play this. Deregulation and deals Kron said companies appeared positive on the merger-and-acquisition landscape at Goldman's financial services conference last month. That's due in part to expected changes in the regulatory environment once President-elect Donald Trump takes office later this month. Given this changing landscape, Kron pointed to Citigroup , Evercore , and Vulcan Materials , among others, on its conviction list as ways to get in on the shift. Power There are several subtrends within the power space that Goldman is following. First, there's the growing demand for power to fuel AI data centers. There's also the expectation for continued strength in utilities' capital expenditures given growth in electrification and manufacturing. From Goldman's conviction list, Kron pointed to Sempra as a way to get in on this idea. Deglobalization Kron pointed to Trump's proposed tariffs as a reason to pull back on globalization. The Republican has called for 20% fees on all imports, with an extra-high tax of 60% on those coming from China. He noted that investors will want to keep tabs on how disrupted supply chains become. For those looking to play the deglobalization trend, Kron once again listed Vulcan, as well as Meritage Homes , as examples. Consumer resiliency While there's always reason to believe something could break the U.S. consumer, Goldman remains confident that they'll continue to spend. Consumer spending has remained solid despite concerns about a potential recession and high inflation over recent years. Notably, consumers have shifted from splashing out on goods during the Covid-19 pandemic to services and experiences they missed out on as lockdowns were lifted. In 2025, the firm expects consumer discretionary cash flow to rise to 5.2% from 4.4% seen in the prior year. "The end of the US consumer is always just around the corner, but either we keep turning a different corner or we never reach that corner that the end is just around," Kron said. Kron has several ideas for this one, ranging from retailers to travel names to real estate stocks focused on shopping centers. Here are some related picks: Burlington Stores , Norwegian Cruise Line and Uber , among others.