For the "Magnificent Seven" tech stocks in 2024, the insatiable appetite for AI resulted in another superb year. While Nvidia (NVDA) exploded by over 175% this year, Tesla (TSLA, Financial), Meta (META, Financial), Amazon (AMZN, Financial), Alphabet (GOOG, GOOGL), and Apple (AAPL, Financial) reached record highs. Analysts see the impact of artificial intelligence growing into industries including energy and software ahead. Goldman Sachs forecasts that with large-cap tech stocks closing their growth advantage over other sectors, the S&P 500 (GSPC) will hit 6,500 by the end of 2025. "Earnings growth will dictate returns," said David Kostin, chief U.S. equities strategist at Goldman Sachs. Driven by AI-fueled gains, Bank of America projects a year-end S&P 500 target of 6,666 for 2025.
Head of equities strategy for BofA Savita Subramanian noted that tech behemoths like Microsoft (MSFT), Amazon, and Alphabet are diversifying investments, therefore supporting more general economic growth. Rising to $244 billion, these businesses are expected to increase capital spending by 17% in 2025. Given that single data centers consume as much daily power as New York City, artificial intelligence-related expansion also raises infrastructure needs. Analysts believe the ripple effects of artificial intelligence will impact markets outside of technology in the not-too-distant future.
