Stock Market in 2025: Types of demand stocks trending; Alphabet, Costco, Citigroup are big bets!

Investors' growing focus on valuations could propel other stocks forward.

1. AI Agents: The Next Big Trend The AI boom will continue into 2025, with AI agents likely becoming a key trend. These are AI systems that autonomously decide the best course of action, a step beyond the traditional models that only follow instructions. This development could revolutionize industries, especially for companies like Alphabet (GOOGL), which offers a vast array of products, from Google Cloud to Android, that can integrate AI agents. Alphabet's launch of Google Agentspace using its Gemini large language model could position it as a leader in this space.

2. Stubborn Inflation Could Lead to Market Stress While inflation has come down since its post-pandemic peak, it’s expected to remain persistently high in 2025. This could disrupt the broader market, especially with the Federal Reserve showing signs of fewer rate cuts. Still, some stocks, like Costco Wholesale (COST), could thrive. Costco has already outperformed the S&P 500 during inflationary periods, and if prices stay elevated, more consumers may turn to Costco, further boosting the stock's performance.

3. The Rise of Value Stocks: After a period of soaring stock prices, investors are expected to shift their attention to valuations in 2025. Value stocks, which trade at lower multiples, may become more attractive. BioNTech (BNTX), for instance, has a low price-to-earnings ratio, making it one of the best value picks. The biotech company continues to generate revenue from its COVID-19 vaccine and has a promising pipeline, all while being undervalued compared to its growth potential.

4. Deregulation Will Benefit Financial Stocks: With the prospect of a more deregulated environment under the incoming Trump administration, the financial sector stands to gain. Citigroup (C) could be a standout in this context. Despite its strong 2024 performance, Citigroup's stock remains attractively priced, and deregulation could fuel further momentum. This is one stock that may continue to benefit from a more favorable regulatory landscape.

5. Energy Stocks: Impact of Increased Drilling The energy sector will face a mixed impact due to deregulation, particularly with the potential increase in domestic oil production. While the increased drilling could boost some energy stocks, it may lead to a drop in oil prices, affecting earnings. However, companies like Enterprise Products Partners (EPD), which operates extensive pipelines across the U.S., are well-positioned. More drilling will result in more oil and gas flowing through these pipelines, which could strengthen Enterprise's performance, regardless of fluctuating oil prices. Additionally, its generous dividend yield makes it an attractive choice for income investors.

Should You Invest in Enterprise Products Partners Right Now? Despite strong performance, Enterprise Products Partners was not included in the list of the 10 best stocks for 2025 by The Motley Fool. However, its track record of increasing distributions for 26 consecutive years, coupled with a high dividend yield, makes it a solid choice for those looking to add income-producing stocks to their portfolios.

2025 looks set to be an exciting year for stock market investors, with AI, inflation, valuations, deregulation, and energy all playing a significant role in shaping the market. Stocks like Alphabet, Costco, BioNTech, Citigroup, and Enterprise Products Partners are poised to benefit if these predictions come true.

Disclaimer: Always Seek Advice from a Financial Expert Before Making Any Investment Decisions