The Roaring 20s: An AI Revolution
Marlin Capital's detailed 2025 preview and analysis is below...
The Marlin Capital Full 2025 Preview:
2024 was a terrific year for US equities with the S&P 500 closing +24% and NDX +27% (higher for the 19th time in 22 years). This was the first time since 1998 and 1999 that the S&P 500 produced 2 consecutive years of +20% total returns.
The 2024 market rally was characterized by a ‘broadening out’ of market gains, with both the SPX and R2K Tech Indices both finishing the year +20%. This was a refreshing change after 2023, when the NDX outpaced both the SPX and R2K Indices by 25-30%.
Tech stocks led the charge in 2024, with only 3 down months (matching the 2021 Bull Run we saw) and just one -10%+ drawdown (in July), as an accommodative Macro backdrop (rate cuts + stable economic growth) continued to catapult stocks higher. The top theme was once again Generative AI - both at the infrastructure layer (NVDA, MRVL, TSM, ANET up 75%+) and, increasingly, the application layer (APP, CRM, META, NOW strength, particularly in the 2H).
Despite the wire to wire Tech rally, under the hood, it was a tale of 2 halves: Big Tech dominated in the 1H and Small Tech took over in the 2H. Mega Cap traded up +42% in the 1H of the year (and tacked on another +11% in the 2H), whereas, Russell 2K Tech was up just +7% in the 1H of the year (but nearly +20% in the 2H of the year).
Looking towards 2025, the market's bullish momentum is up for debate as Tech P/E valuations are currently at 20+ year highs. With that said, the key foundational elements for the 23-24 Bull Run are once again intact into the New Year (GenAI, Macro, balanced positioning, Earnings growth, etc.).