The financial sector was up over 30% in 2024 and is poised for another strong year in 2025, according to a report from Fidelity. Even though the financial sector fluctuates based on the economy, the overall sentiment is positive for this industry.
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The U.S. appears to be on track to avoid a mild recession as economists continue to pay attention to rate announcements from the Federal Reserve (Fed). The good news is that even though economic concerns are still looming over the stubborn inflation figures, many industries are still set to prosper in the coming year.
What are the five best sectors to invest in this year? We spoke with investing experts and reviewed reputable sources to find the best options for 2025.
In another report from Fidelity, experts shared that with the 2024 election wrapped up, they envision lighter regulatory restrictions for banks with more mergers and acquisitions.
The consensus is that if policymakers can manage to cool down inflation without tipping the economy into a recession through rate announcements, this should boost confidence for consumers and businesses.
A report from Business Insider noted that after a standout year in 2024 with returns of 30% in 2024, the financial industry is heading into 2025 with momentum since it’s tied into the overall economy. If the economy does well during this year, then this sector will profit and it’s certainly worth investing in banks, index funds and other related assets.
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“The technology sector’s momentum in 2025 is being powered by a perfect storm of forces — enterprise software innovation, AI integration and unprecedented investment,” said Jeff Wilson, a portfolio manager at Jensen Investment Management.
“What’s particularly compelling is how recent capital expenditure announcements from giants like Microsoft signal robust demand ahead, showcasing how deep technological expertise can translate into sustained competitive advantages, even in traditionally cyclical markets.”
Business Insider noted that tech should expect another dominant year as technology continues to advance with significant investments globally. The article also shared that Goldman Sachs is bullish on software and services, not just the role of AI.
“Right now, artificial intelligence permeates everything–from self-driving vehicles to chatbots. Whether it is NVIDIA or the next artificial intelligence company, companies advancing in this field are worth watching,” said Georgi Todorov, the founder and CEO of Create & Grow.
With constant news headlines of investments and advancements in the field of AI, this is a sector worth investing in if you have the funds.
“Enterprise technology spending remains robust as companies implement AI solutions across sectors. In our view, continued investment in technology infrastructure will likely be driven by a focus on efficiency and automation,” Jensen concluded.
“Online buying is still rising, and the businesses driving e-commerce and payments are flourishing,” noted Todorov. “Consider digital wallets and tools streamlining international transactions.”
The report from Fidelity found that communication services was one of the best-performing sectors in 2024, with digital advertising revenue rising from tech giants like Meta Platforms and Alphabet. Since communication services include various businesses, from wireless providers to digital payment processors, there’s optimism about what 2025 has in store for this industry.
If you want to explore investment opportunities in this sector, you can consider a variety of assets from Netflix to Disney, depending on your personal risk tolerance levels.
Business Insider and Fidelity experts agree that this sector will benefit from AI in 2025. Business Insider shared that analysts believe that since this sector is defensive, it will perform even if the economy slows down.
However, with the introduction of AI-powered tools to fuel power demand, there could be higher power prices and increased revenue growth.
“With strong global environmental drives, solar, wind, and electric vehicle infrastructure is proliferating. A particularly hidden jewel is energy storage technology,” Todorov elaborated.
According to Fidelity, this sector could experience a “once-in-a-generation” opportunity for exponential growth as energy demands increase and AI continues to provide a massive boost. With the belief that energy demands for data centers powering AI will provide significant returns, this is a sector worth paying attention to in 2025.
With Bank of America predicting over 20% growth for the sector in 2025, according to Business Insider, this is an industry worth investing in this year. While the research found that this industry was drastically hurt by concerns over the Chinese economy and dropping commodity prices worldwide, analysts are hopeful for a return this year.
According to a report from MarketWatch, materials stocks are a cyclical investment since demand for materials is determined by the overall global economy. The same report also discovered that even though this secretary had negative returns in 2024, the S&P 500’s materials sector has never dropped for consecutive years since 1990. The average return after a negative year has been over 20% since 1990.
The Fidelity materials portfolio invests in copper producers since it’s a crucial input for developing electric vehicles and renewable energy sources. It’s believed that demand could rise in 2025, making companies associated with materials more profitable.
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This article originally appeared on GOBankingRates.com: 5 Best Sectors To Invest in 2025, According to Experts
