The growth rate of AI infrastructure is likely to slow due to increased competition, says Jackson in a Nov 28 note. “Cyclical stocks’ valuations are currently high after strong performance this year, although their risk/reward profile is more mixed for 2025.”
US equity returns were dominated by three themes in 2024: one, the rise of artificial intelligence (AI) and its derivatives; two, the strong performance of rate‑sensitive cyclical stocks in anticipation of US Federal Reserve rate cuts; and three, soaring valuations of perceived “safe bets” despite unchanged earnings growth.
In 2025, all three of these themes could unwind, says Stephon Jackson, head of T. Rowe Price Investment Management.
