5 major themes to watch in 2025

AI: In Everything Everywhere All at Once

Coming into 2024, we still couldn’t shut up about inflation. Despite the price increases slowing, little has changed, with some attributing higher prices to Donald Trump’s remarkable political comeback and the Fed’s latest bout of inflation concerns still able to knock stocks down, with the S&P 500 Index dropping 3% on Wednesday.

But if inflation was the word investors feared in ’23, AI was the word they couldn’t get enough of in ’24, as the hype for generative AI surged, reached fever pitch, and then got a bit louder. The major beneficiary was of course big tech, and America now has eight stocks with a market cap of more than $1 trillion — aka the BATMMAAN stocks.

It’s hard to overstate how much influence these companies have. You’d be hard pressed to find many people in America who don’t interact with Meta’s social-media platforms, Apple’s phones, Tesla’s cars, Google’s search engine, Microsoft’s software, anything with an Nvidia or Broadcom chip in it, or Amazon’s e-commerce operation on a regular basis. Collectively, they’ve gained $6.2 trillion in value this year, representing 12% of the S&P 500’s revenue, 26% of its profit, and 34% of its weighting.

Although BATMMAAN drove the narrative, these stocks were hardly alone in riding the AI wave: Reddit execs talked up its AI opportunity; Palantir topped the whole S&P 500 Index on the back of its AI contracts; nuclear stocks got a boost as tech companies sought low-emission energy sources; and teenagers continued using AI in weird, wonderful, and sometimes scary ways. Whether AI continues to improve and actually delivers on its market hype is the key question moving into 2025, particularly with mounting evidence that progress in the fundamental models may be slowing.

The first-class economy

Outside the tech sphere, people in the real world wanted to have that unforgettable experience. Remember how “revenge shopping” and “revenge travel” captured the minds, wallets, and Instagram feeds of postpandemic consumers? While those trends have faded a bit, their thirst for spending hasn’t fizzled. Instead, it’s taken on something of a new form: premiumization, particularly for experiences.

Take Ticketmaster owner Live Nation, which reported record-breaking attendance in its latest quarter. CEO Michael Rapino credited its premium experiences as “a big underpin” to growth, with VIP ticket revenue at major festivals up more than 20% compared to last year, and Eras Tour attendees spending hundreds if not thousands to see Taylor Swift live.

The allure of premium offerings has also gone skyward.

Following the no-frills airline Spirit’s bankruptcy last month, Delta announced plans to double down on its high-end categories — an industry-wide playbook echoed by United and American — with a striking 85% of its newly added seats next year allocated to premium cabins. Indeed, Delta’s premium cabin has outpaced run-of-the-mill economy in revenue growth, as people splurge on luxury travel.

Even “The Happiest Place on Earth” is following suit. In October, Disneyland hiked prices for its highest-demand days, with the most expensive daily ticket at Disney’s California park more than doubling over the past decade. Yet customers remain undeterred. Disney’s Experiences division raked in $26 billion in revenue for the first three quarters of the year, 7% higher than over the same period in 2023.

People are more willing than ever to pay for life’s luxuries, big or small, and, unless the economy takes a big hit, it’s hard to see that changing in 2025.

Child’s play

While the industries that bank on people enjoying the finer things in life have boomed, sometimes you just can’t beat a simple night at the movies, especially if you’ve got the kids in tow...

Cast your minds back to the cinematic landscape in the first half of 2024: flops like “Madame Web” and Apple’s “Argylle” were making headlines for all the wrong reasons, people were trying (and failing) to make “Garfuriosa” happen, and even the director of “Dune 2” was irked that it was still the biggest film of the year in June… Then, “Inside Out 2” landed and it became the highest-grossing animated movie of all time, opening the floodgates for subsequent family-friendly films like “Despicable Me 4”, “Wicked”, and “Moana 2” to swoop in and breathe life into theaters.

Given that there are only two weekends left in 2024, the narrow 0.1% gap between PG and PG-13 movies’ respective shares, and the fact that two more potential PG blockbusters (“Mufasa: The Lion King” and “Sonic the Hedgehog 3”) hit theaters today, PG movies might end the year on top for the first time in almost 30 years.

Fast forward: Even in a year when 3 of the top 5 highest-grossing movies were all PG-rated — “Inside Out 2” was first, “Despicable Me 4” came third and “Moana 2” followed in fourth — the age rating will still only just about snatch top spot in 2024, so maybe don’t bank on it happening again next year.

The Baby Bust

While kids’ movies are having a moment, there might not be quite the same audience for them in the next century, as the widespread slump in fertility rates continues. Indeed, the global total fertility rate has more than halved since 1970 to just 2.25 in 2023.

The worldwide total still lands above the rate required for a population to replace itself from one generation to the next (~2.1 births per woman), meaning that the global population is growing slightly… for now. But it’s estimated that by 2050 more than three-quarters of countries won’t be able to sustain their population size.

Conti-natal drift

America’s fertility rate has been below replacement level since 2007. In Europe, the brief baby bump observed in the Nordic countries in the ‘90s has all but vanished. In Asia, South Korea’s fertility rate remains the world’s lowest at 0.72, and China now has a rate less than one-seventh of its 1963 peak. With the exception of Africa (the continent’s population is set to double by 2050), what’s so startling is how universal the reproductive trend is — though it is, in a sense, unsurprising.

Improved education and contraceptive access have meant that there’s a growing female workforce. But perhaps most important, many people just don’t seem to want kids anymore, for various social, financial, and political reasons. Despite governments pressing on with population-boosting policies, the global fertility crisis shows no signs of slowing.

To the moon... and beyond?

If there’s one thing that could describe the crypto scene lately, it’s that everybody (and their sisters and cousins) has at least been curious, if not explicitly evangelistic, about it after the OG cryptocurrency bitcoin shot up to a milestone of $100,000 earlier this month.

2024 kicked off with a massive rally led by the biggest cryptocurrency after the SEC begrudgingly gave the green light to 11 spot bitcoin exchange-traded funds. Almost a year later, bitcoin has drawn record numbers of institutional and retail investors into its orbit, to a point that the “digital gold” ETF has now even surpassed crypto founder Satoshi Nakamoto’s bitcoin stash, with companies like MicroStrategy riding the crypto current to eye-watering, at-times confusing, valuations.

The Trump bump: crypto edition

But the major turning point for “magic internet money” came in November after the self-proclaimed “crypto president” won the election. Since Trump’s victory, bitcoin is up ~50%, with memecoin mania returning to an industry that has experienced multiple winters. Alongside the recent resignation of crypto-skeptic SEC chair Gary Gensler, who is set to be replaced by crypto-friendly Paul Atkins, Trump will be working alongside the most pro-crypto Congress in history, with 262 pro-crypto politicians starting from January: a dream come true for digital traders with 22 of the top 25 cryptocurrencies going up this year.