Everyone knows the old adage that what goes up must eventually come down. After the S&P 500 soared over 23% in 2024, many investors are understandably worried that the market is frothier than even the sugariest drink on the Starbucks menu.

But most analysts believe that 2025 will be another strong year, even if the market doesn’t soar at the same breakneck pace as it did in 2024. For savvy investors, knowing which areas of the market are poised for growth ahead of time will set you up for another year of great gains.

Here are the industries and sectors that analysts think are going to define the next year:

• Artificial intelligence: You may think the biggest gains of the AI boom are already behind us, but experts argue that might not necessarily be true. After all, we’re only at the beginning of consumer adoption of tools like generative AI. “Massive investment in AI infrastructure, as well as ever more powerful chips and models, are laying the groundwork for increased adoption,” explained BlackRock analysts in their 2025 forward-looking report.
• Utilities: Once again, all roads lead back to AI, and powering energy-hungry data centers will be one of the biggest tasks ahead for big tech giants. “We believe the power and resources field is set for transformational growth, offering significant investment opportunities across power generation, grid infrastructure, and natural resources as the world adapts to increasing electricity demand,” explained UBS analysts in their 2025 outlook report. JP Morgan and Goldman Sachs also both recommend overweighting the Utilities sector.
• Financials: Banks and financial services firms are set to be a major winner of President-elect Donald Trump’s deregulation push, according to JP Morgan’s forward-looking 2025 report.

Zoom out: “We believe AI and geopolitics will remain key themes for 2025, yet there are significant shifts in the underlying policies, demographics, and tech developments that will drive them forward,” explained Jay Jacobs, US Head of Thematic and Active ETFs at BlackRock.—LB

You’ve probably done enough holiday shopping at this point to last you a lifetime. But how about bargain hunting for some stocks?

Sure, we highlighted the sectors that analysts think will take off in 2025—but within those broader themes, where are the undervalued opportunities?

Despite Brew Markets’ omnipresent awareness of everything in the world, we still defer to the experts when it comes to stock picks. Morningstar highlighted a few names that are undervalued based on their current valuations, some of which include:

• Devon Energy: “We view Devon as a steady, low-cost provider whose assets are on the low end of the US shale cost curve,” wrote Chief US Strategist for Morningstar David Sekera. Its average price target among analysts who cover the stock is $50—52% higher than shares trade today.
• Dow: “As a commodity chemicals producer, Dow’s results are subject to high operating leverage where a small increase in volumes would have a large impact on profits,” explained Sekera. Its average price target is $53, 32% higher than where shares trade now.
• “We also see a number of idiosyncratic opportunities where we don’t think the market is correctly valuing the value of drug markets pipelines such as Bristol-Myers, Amgen, and Gilead,” added Sekera.

Goldman Sachs also shone a spotlight on a few of its own top picks, including:

• Fluence Energy: Despite being down 30% in 2024, its average price target among analysts who cover the stock is $26—nearly 64% higher than where shares trade today.
• Enphase Energy: Goldman analysts see upside for the solar company, despite shares declining a staggering 43% over the past year. The average price target on the stock is $94—almost 37% higher than shares trade now.
• Advanced Micro Devices: Even though the stock declined about 8% in 2024, its average price target is $184, 52% higher than shares trade now. But not everyone is as optimistic about the stock: BofA recently downgraded AMD from “buy” to “neutral.”

Keep in mind: These are analysts’ best ideas based on valuations and fundamentals, but no matter how good of an investor you are, it’s still incredibly difficult to nail exactly which stocks are going to rise over the course of an entire year. At the end of the day, staying broad among key sectors will give you a better chance of long-term gains.

Just listen to Mark Haefele, CIO of Global Wealth Management at UBS: “As we consider a wider range of market outcomes ahead, the unpredictability of this decade so far should remind us of the importance of humility and market diversification."—LB

We’ve covered sectors. We’ve covered stocks. But what about the entire S&P 500? Where do the pros believe the market will be by this time next year?

Everyone on Wall Street likes to call their shots, but it’s tough to nail a market prediction on any given day, much less 12 months from now. Just look at these last two years, with their over-20% gains—no one saw that coming. Analysts had to hustle to raise their 2025 year-end price targets when they realized the rally wasn’t quitting anytime soon, and the vast majority of them are very bullish heading into next year.

According to FactSet, the average analyst price target for the S&P 500 by the end of 2025 is 6,678.18. Here are where each of the major Wall Street firms stand in comparison, with a link to each company’s research detailing exactly why they think the S&P 500 will hit the price they predict:

UBS: 6,400

JPMorgan: 6,500

Morgan Stanley: 6,500

Goldman Sachs: 6,500

Citi: 6,500

RBC Capital Markets: 6,600

Barclays: 6,600

Wells Fargo Investment Institute: 6,600

Bank of America: 6,666

Deutsche Bank: 7,000

Oppenheimer Asset Management: 7,100

Will Wall Street be proven right, or will the markets surprise the pros once again? Only time will tell!

Forget the Wall Street pros, what do they know? Our readers are the best in the biz, and we want to hear your market predictions for the coming year.

Click here to tell us how you think the S&P 500 will perform, what sector you’re watching next year, and what will be the best stock of 2025. We’ll check back in a year to see who nailed their prediction.

In the meantime, from all of us here at Brew Markets to all of you, have a safe and happy new year!