One of the most dominant investment themes of 2024 was the emergence of AI. Investors poured money into new generative AI startups, chipmakers like NVIDIA that power the models saw their stocks soar, and incumbent tech companies like Google, Apple, and Microsoft made aggressive investments in data centers as demand for data exploded. A less recognized but related trend has been the rise of construction spending on manufacturing, which has tripled since 2020 from $75 billion per year to nearly $250 billion in 2024 (U.S. Census Bureau data) on the back of efforts to onshore or nearshore supply chains following pandemic disruptions. To accommodate this growth, significant investments in both infrastructure and power will be needed, creating opportunities for investors to benefit. In 2024 our investment team surveyed the opportunities to invest in digital infrastructure across public and private markets. We also published a deep dive on the state of the power markets globally including implications across industry segments:

Digital Infrastructure Market Overview – October 2024

Charging Forward – The Case for Investing in Power Now

Despite market volatility in December, the fourth quarter of 2024 showcased the continued dominance of US equities, particularly in the Large Cap Growth segment, which posted an impressive 7.1% gain. This outperformance came amid significant market divergences, with developed international markets declining as the U.S. dollar strengthened and fixed income markets struggling as the 10-year Treasury yield climbed to 4.6% on worries about inflation and rising government debt. The U.S. economy demonstrated remarkable resilience, with strong holiday consumer spending and robust labor market data. However, persistent inflation prompted the Federal Reserve to maintain a more hawkish stance even while implementing its third consecutive rate cut to 4.25-4.5%. Given the combination of strong economic fundamentals and ongoing policy challenges, markets appear poised for continued complexity as we enter 2025.

The “Magnificent 7” tech giants—Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla—dominated the investment landscape in 2024, driving an outsized share of the S&P 500’s return. Company fundamentals, in aggregate, have been key drivers of this success, as seen by significantly higher revenue growth and profit margins. At the forefront of the AI revolution, these companies are powering breakthroughs in critical areas like advanced AI hardware and emerging AI agents, further cementing their dominance. Yet, as valuations soar and questions linger about the return on massive investments in innovation, the stakes have never been higher, especially given the concentration they hold within the major indices. Dive into how these titans are redefining the future—and what it means for investors.

Read our assessment here.

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