December 16, 2024
Deepwater’s 2025 Predictions
Future, Markets

Continuing our annual market predictions into the 9th year, here’s what we think will happen in 2025:

  1. The Nasdaq will see two 10% pullbacks, and still finish the year higher than it started – We still believe we are in year 2 of a 3-5 year AI-driven bull market that will end in the bursting of a bubble.
  2. TikTok’s U.S. business will be sold – We predict a U.S. buyer will purchase TikTok U.S for between $50-100B.
  3. Apple and Tesla will receive tariff waivers (if Trump executes his proposed China tariffs) – Make no mistake, increased tariffs are coming for many manufacturers, but Apple and Tesla will be spared high tariffs – Trump doesn’t want Tesla to lose to BYD or Apple to lose to Samsung.
  4. The IPO market will continue to accelerate to +250 in 2025, up from 210 in 2024 – Continued recovery in the IPO market will result in 29% growth in 2025, down from 36% year-over-year growth in 2023.
  5. Russell 2000 Growth (IWO) will outperform the S&P 500 (SPY) – We had the same prediction last year, and although it did not happen, the performance gap shrunk from 2023. The iShares Russell 2000 Growth ETF (IWO) will outperform the SPDR S&P 500 EFT Trust (SPY). Performance from the sub-$20B tech companies will outperform the large cap companies.
  6. Bitcoin will reach $150k – The party will continue. Ripe market and regulatory conditions will send Bitcoin to new highs in 2025, with likely pullbacks occurring before its peak.
  7. Uber and Lyft will underperform the Nasdaq – Anticipation for robotaxi networks will dampen the long-term outlook of today’s rideshare companies.
  8. Tesla will start selling a $35k model (w/o EV Credits) – This compares to the Model 3 starting at $42.5k. Factoring in EV tax credit cancellations, Tesla will offer their most affordable model (whether that be named Model 2, Q, A, etc.). The easiest way to accomplish this feat is to sell a stripped-down version of the Model 3 (removed features).
  9. 2025 will be the year of custom silicon – Hyperscalers are set to expand their adoption of custom silicon in AI infrastructure, complementing the capabilities of general-purpose GPUs and diversifying their hardware ecosystems.
  10. Tesla will gain U.S. EV Market Share by the end of the year – It’s currently at 48% and we expect it to increase slightly to +50%.

A look back at our 2024 predictions:

We went 6 for 12 on our 2024 predictions:

  1. IWO will outperform the S&P500. Missed. YTD, SPY is up 29% and IWO is up 22%. The gap between the two indices remained the same in 2024 as it was in 2023, at 7%.
  2. Large cap technology platform will be acquisitive in 2024. Got it. Several major tech companies engaged in significant mergers and acquisitions, highlighting a trend of consolidation and strategic expansion. Notable examples include: Nvidia acquiring Run.AI for $700m, Cisco acquiring Splunk for $28B, Hewlett Packard Enterprise (HPE) acquiring Juniper Networks for $14B, and Salesforce acquiring WalkMe for $1.5B.
  3. Apple will bring generative AI to Siri. Got it. Apple’s use of its own SLMs to power Apple Intelligence, combined with OpenAI’s GPT, has given iPhone users direct access to a more powerful Siri. Although it is not in full force yet, pending 1H 2025, Siri has gotten better, and will continue to add useful functionality that utilizing GenAI.
  4. Apple will not announce any additional devices in the Vision product line. Got it. Apple is at a crossroads with the Vision Pro – either make it cheaper and develop use cases or audible to a less immersive wearable like Meta’s Ray-Bans or Google Glasses, utilizing ambient computing.
  5. Apple will acquire Peloton. Missed. While we got this wrong, investors recognized shares of PTON were undervalued late last year. Since then, shares are up 66%, compared to the Nasdaq up 35%. And to think they did it without any AI.
  6. The Tesla Robotaxi will not be announced. Missed. Actually, this was a huge miss, and a lesson that Elon is all in on autonomy and is not concerned about talk of future vehicles impacting sales of current vehicles.
  7. Tesla will maintain US EV market share. Missed. Tesla’s US market share did decrease from about 55% to 48%. Long-term, we expect Tesla will maintain its near 50% market share.
  8. While EVs growth will slow in 2024, it will rebound in 2025. Got it. EV growth has slowed to about 22% according to Bloomberg. We continue to look for a rebound in 2025.
  9. The IPO market returns to 2019 levels. Got it. 2024 has seen 210 IPOs, compared to 232 in 2019. We are expecting 2025 numbers to exceed those from 2019.
  10. The anticipation of GTA VI makes TTWO the best performing US gaming stock in 2024. Missed. Take-Two is up 17% YTD, slightly ahead of EA up 14%. However, both gaming stocks are significantly underperforming when compares to Roblox up 34%.
  11. Reddit will be acquired for their data. Missed. While Reddit wasn’t acquired, Reddit IPO’ed in March and is up nearly 300%.
  12. AI will negatively impact the 2024 Presidential Election. Got it. There were countless AI generated images going around online, but the more egregious examples were deepfake phone calls impersonating politicians.

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