The “Magnificent Seven” tech stocks, including Tesla (TSLA), Meta (META), and Nvidia (NVDA), have had a massive year in 2024, thanks to the hype surrounding artificial intelligence (AI). Now, analysts think that the AI trade will spread into other areas like utilities and software in 2025, according to Yahoo Finance. Indeed, Goldman Sachs predicts that the S&P 500 (SPX) will hit 6,500 by the end of 2025, with other sectors catching up to tech as earnings growth evens out across the market.
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Bank of America’s Savita Subramanian also expects AI to play a big role in boosting earnings across more industries. Companies like Microsoft (MSFT) and Amazon (AMZN) are set to spend $244 billion in 2025 on AI-related projects, which include running massive data centers. This has already caused utility stocks (XLU) to rally more than 24% in 2024 since they benefit from providing the power needed for AI infrastructure.
Separately, Goldman Sachs also pointed to a shift in the AI trade going forward. In fact, the focus appears to be moving away from chipmakers like Nvidia to infrastructure companies like Arm Holdings (ARM) and Vistra Corp (VST). After that, investors will likely turn to companies that use AI to grow their business, such as Mastercard (MA), Salesforce (CRM), and Adobe (ADBE). These companies, which benefit from AI adoption rather than selling AI hardware, are expected to drive the next wave of growth in the AI market.
Which Magnificent Seven Stocks Is the Best Buy?
Overall, when it comes to the Magnificent Seven stocks, analysts expect the most upside potential from Nvidia stock thanks to its price target of $177.08 per share, which implies gains of more than 29% from current levels. On the other hand, they expect the least from Tesla, as its price target of $294.30 per share implies a decline of more than 31%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
