Top 10 Best & Worst Investments for 2025 (Predictions)
Data-driven predictions for the best & worst investments of 2025 under Trump
Using comprehensive datasets for the U.S. economy, analyzing current trends, and estimating likely actions under a new Trump administration, an advanced AI synthesized a rank-ordered list of what are likely to be the top 10 best and top 10 worst investments for 2025.
Keep in mind that these predictions may end up completely inaccurate or far “off-base” if Trump’s policies end up being different than anticipated (e.g. zero major tariffs, no deportations/change in immigration, etc.) or other unknowns emerge.
Given the current state of the U.S. economy, we should expect:
Strong prospects for: defense, AI, autonomous sectors; stable defensives; and U.S.-centric businesses
Struggles for: import-dependent retailers, office real estate, and growth stocks devoid of profits.
Disclaimer: Nothing here is investment or financial advice. Companies and tickers are examples commonly known in each category - not recommendations. All ROI and odds remain highly speculative and are derived from historical analogies.
Top 10 Best Investments for 2025
Included below is a ranked list of what are predicted to be the top 10 investments for 2025 under Trump’s first year of his second term.
1. U.S. Defense & AI Contractors
Examples: Lockheed Martin (LMT), Raytheon Technologies (RTX), Northrop Grumman (NOC), Palantir (PLTR)
Odds of Outperformance: ~85%
Estimated ROI: +10% to +15%
Rationale: Increased defense R&D, AI integration into military systems, historical double-digit boosts in priority sectors. Palantir’s AI solutions, LMT and NOC’s defense R&D align with government priorities.
2. Autonomous Vehicle (AV) Technology Leaders
Examples: Tesla (TSLA), Alphabet’s Waymo (GOOG), Mobileye (MBLY)
Odds of Outperformance: ~80%
Estimated ROI: +12% to +18%
Rationale: Anticipated regulatory support for AV fleets and Robotaxis. Tesla’s 2024 rally signals confidence; GM’s Cruise and Waymo’s deployments grow revenue streams.
3. Defensive Consumer Staples (Food, Household Goods)
Examples: Procter & Gamble (PG), Coca-Cola (KO), General Mills (GIS), Colgate-Palmolive (CL)
Odds of Outperformance: ~75%
Estimated ROI: +8% to +12%
Rationale: Late-cycle resilience, stable demand. Historically, these names outperform when growth slows and rate cuts are fewer.
4. Utilities & Regulated Infrastructure Companies
Examples: NextEra Energy (NEE), Duke Energy (DUK), American Water Works (AWK)
Odds of Outperformance: ~70%
Estimated ROI: +6% to +10%
Rationale: Consistent dividends, regulated returns. Utilities shine in moderate-growth, stable-rate environments.
5. TIPS (Treasury Inflation-Protected Securities)
Examples: iShares TIPS Bond ETF (TIP), Schwab U.S. TIPS ETF (SCHP)
Odds of Outperformance vs. Nominal Treasuries: ~70%
Estimated ROI: +4% to +7%
Rationale: Inflation hedge as inflation holds ~3%. Historically outperform nominal bonds under persistent inflation.
6. Short-Duration Corporate Bonds (High Quality)
Examples: Vanguard Short-Term Corporate Bond ETF (VCSH), PIMCO Short-Term Corporate Bond funds
Odds of Outperformance: ~65%
Estimated ROI: +3% to +5%
Rationale: Less interest-rate risk, stable yields in a cautious Fed environment.
7. Domestic Commodity Producers (Energy, Metals)
Examples: Exxon Mobil (XOM), Chevron (CVX), Freeport-McMoRan (FCX) for copper, Nucor (NUE) for domestic steel
Odds of Outperformance: ~65%
Estimated ROI: +5% to +10%
Rationale: Infrastructure demand, less regulatory hurdles. Tariffs and domestic sourcing support pricing power for U.S. miners and energy firms.
8. U.S.-Focused Medical Device & Healthcare Services Firms
Examples: Medtronic (MDT), UnitedHealth Group (UNH), HCA Healthcare (HCA)
Odds of Outperformance: ~60%
Estimated ROI: +6% to +9%
Rationale: Inelastic demand, stable revenues. Healthcare outperforms in slow growth and mild inflation phases.
9. Select Crypto Assets with Strong Institutional Backing
Examples: Bitcoin, Ethereum, Coinbase (COIN) for infrastructure
Odds of Outperformance: ~60%
Estimated ROI: +10% to +20% (high volatility)
Rationale: Regulatory clarity and institutional interest support stable inflows. BTC and ETH are the “blue-chips” of crypto, historically rallying with positive policy signals.
10. Domestic-Focused Consumer Discretionary Companies with Minimal Import Exposure
Examples: Tractor Supply Company (TSCO), O’Reilly Automotive (ORLY), Domestically sourced furniture or appliance makers like Tempur Sealy (TPX)
Odds of Outperformance: ~55%
Estimated ROI: +5% to +8%
Rationale: Tariffs raise import costs for competitors, benefiting firms with local supply chains. Historically, domestic-centric retailers gain market share in tariff environments.
(Related: U.S. Economy Predictions for 2025)
Top 10 Worst Investments for 2025
Included below is a list of predictions for what we think may end up the worst investments for 2025 under Trump.
1. Office-Focused Commercial Real Estate (REITs, Developers)
Examples: SL Green Realty (SLG), Vornado Realty Trust (VNO), Office-focused CMBS funds
Odds of Underperformance: ~85%
Estimated ROI: -10% to -20%
Rationale: High vacancies, hybrid work reduces office demand. Historically, CRE downturns persist for years after structural demand shifts.
2. Import-Dependent Retailers (Electronics, Apparel)
Examples: Best Buy (BBY) heavily dependent on imported electronics, Gap (GPS) for apparel import reliance
Odds of Underperformance: ~80%
Estimated ROI: -5% to -15%
Rationale: Tariffs inflate COGS, margin compression. Similar margin hits occurred in 2018 for companies reliant on Chinese imports.
3. Highly Valued High-Growth Tech Stocks without Profits
Examples: Profitless SaaS or e-commerce firms like Cloudflare (NET), Snowflake (SNOW) if still unprofitable, certain ARK ETF holdings focusing on non-earning growth names
Odds of Underperformance: ~75%
Estimated ROI: -5% to -15%
Rationale: With fewer rate cuts, cost of capital higher, speculative premiums vanish. The 2022 post-Fed pivot period showed similar declines.
4. Long-Duration Bonds (10+ Year Treasuries)
Examples: iShares 20+ Year Treasury Bond ETF (TLT)
Odds of Underperformance vs. Short Duration: ~75%
Estimated ROI: -2% to +1%
Rationale: Persistent inflation ~3% erodes real returns. Historical periods of stable high yields see long bonds suffer in real terms.
5. Global Multinational Corporations Highly Exposed to China/EU
Examples: Caterpillar (CAT) with large export markets, Boeing (BA) reliant on international orders, Apple (AAPL) exposed to China supply chains and sales (moderate risk)
Odds of Underperformance: ~70%
Estimated ROI: 0% to -10%
Rationale: Retaliatory tariffs reduce exports, weaker global demand weighs on earnings. In 2018-2019, such firms lagged domestic peers.
6. Over-Leveraged Consumer Discretionary Firms Relying on Cheap Debt
Examples: Highly leveraged retailers or mall-based chains, e.g., Macy’s (M), or smaller private companies with high debt burdens
Odds of Underperformance: ~70%
Estimated ROI: -3% to -8%
Rationale: With stable high rates, refinancing costs rise. Historical credit tightening squeezes heavily indebted retail and leisure firms.
7. Pure Import-Based Commodity Processors
Examples: Companies that import raw steel slabs to process, such as some smaller steel fabricators or specialty metal processors dependent on cheap foreign inputs
Odds of Underperformance: ~65%
Estimated ROI: -2% to -7%
Rationale: Tariffs raise raw material costs, eroding margins. In 2018 steel tariffs, some downstream processors reported margin hits and underperformed domestic miners and integrated mills.
8. Office Equipment & Non-Essential Business Services Suppliers
Examples: Steelcase (SCS) for office furniture, Staples (private, but indicative), companies selling office printers or copiers
Odds of Underperformance: ~65%
Estimated ROI: -2% to +2% (lagging the market)
Rationale: Corporate belt-tightening under margin pressure reduces spending on office fixtures. Historically, non-essential B2B suppliers struggled late-cycle.
9. Luxury Goods Firms Dependent on International Travel & Chinese Tourists
Examples: Tapestry (TPR) (Coach brand), Estee Lauder (EL) heavily reliant on travel retail, some LVHM ADRs if they were available in U.S. markets
Odds of Underperformance: ~60%
Estimated ROI: 0% to -5% relative to the market
Rationale: With trade tensions and slower Chinese growth (~4.5%-5.0%), international travel and luxury spending may not rebound strongly. In past global slowdowns, luxury stocks lagged.
10. Highly Leveraged CRE Debt Instruments (CMBS Linked to Office/Retail)
Examples: Certain tranches of CMBS ETFs focusing on office mortgages, private CRE debt funds with retail exposure
Odds of Underperformance: ~60%
Estimated ROI: -0% to -10%
Rationale: Persistent vacancy issues raise default risks. Post-2008 and post-early 90s recessions, underperforming property types saw CMBS prices decline.
(Related: Current State of the U.S. Economy & Forecast)
Takeaways & Interlinks:
The best bets concentrate on sectors benefitting from government priorities (defense/AI), stable cash flows (staples, utilities), inflation protection (TIPS), domestic supply chain advantages, and new growth lanes with regulatory clarity (AV, certain crypto). Historically, these conditions yield above-average returns in a slow-growth, modest-inflation scenario with limited Fed easing.
The worst bets involve areas hit by trade tensions (import-dependent retailers, multinational exporters), structural shifts (office CRE), or high valuations sensitive to higher discount rates (profitless growth tech) and segments that rely heavily on cheap imports or cheap financing.
This integrated approach, referencing historical episodes, current policy directions, inflation and wage data, and sector rotation principles, provides a nuanced investment outlook for 2025 under the scenario described.
Logic behind the 2025 best/worst investment predictions
1. Starting with the Macro Baseline: The foundational logic stemmed from the macroeconomic scenario derived from the data compiled and previous analyses:
GDP Growth Slowing: Expectation of U.S. GDP growth at around 1.5%-2.0% by late 2025, down from ~2.5% in 2024, sets the stage for a late-cycle environment.
Inflation Persisting at ~3.0%-3.5%: Sticky inflation above the Fed’s 2% target means that the central bank must remain cautious.
Limited Fed Cuts (Only Two in 2025): This reduces monetary stimulus and raises the cost of capital compared to market expectations of more aggressive easing. A more neutral to slightly restrictive policy stance is consistent with cooler growth, persistent inflation, and a desire to avoid reigniting price pressures.
Logic: When growth moderates and the Fed is more cautious, equity markets often favor quality, stability, and sectors benefiting from ongoing policy or structural support.
2. Influence of Tariffs and Trade Tensions: The universal tariffs (20% on all imports, 60% on Chinese goods) and expected retaliations shape supply chain decisions and cost structures:
Tariff Pass-Through: Higher prices for imported components and consumer goods erode margins for companies dependent on foreign inputs.
Domestic Advantage: Firms sourcing locally or producing domestically stand to benefit from reduced foreign competition and more stable cost structures.
Export-Exposed Multinationals Suffer: Retaliatory measures and weaker foreign demand mean export-heavy U.S. companies face revenue and profit headwinds.
Logic: Tariff environments historically shift the competitive landscape. This logic pushed domestic-oriented, tariff-resilient investments toward the “best” category, while import-reliant or highly export-dependent firms moved toward “worst” outcomes.
3. Sectoral & Policy Priorities: From the data:
Government Spending on Defense & AI: Past increases in government R&D and procurement (e.g., post-9/11 defense buildup) delivered strong tailwinds for defense contractors and tech integrators. Now, AI-driven defense capabilities and AV-friendly regulation create growth lanes. Defense/AI companies therefore become top picks.
AV & AI Growth: Regulatory support for autonomous vehicles and explicit interest in AI innovation set conditions similar to previous administrations’ support for EVs and renewables, when favored sectors outperformed.
Logic: Historically, when government policy explicitly supports certain technologies or sectors, those sectors tend to see outsized revenue and share price growth. Thus, AV and defense/AI contractors rank highly.
4. Late-Cycle Sector Rotation & Defensive Positioning: Historical patterns show that as expansions mature and rate cuts underdeliver relative to expectations:
Defensive Sectors Outperform: Utilities, consumer staples, and healthcare/services often do well because their earnings are stable and less sensitive to economic slowdowns. In previous late-cycle phases (e.g., 2006-2007, 2018-2019), these defensives beat the broader market.
High-Valuation, Profitless Growth Struggle: When easy money wanes, the “long-duration” equities—those relying on future speculative earnings—lose attractiveness. Past episodes (like the Fed pivot in 2022) saw heavy multiple compression for profitless growth tech stocks.
Logic: Applying historical sector rotation logic made it clear that stable earnings, low cyclicality, and reliable dividends would outpace speculative, highly valued growth firms in a year of moderated growth and inflation.
5. Real Assets, TIPS, Interest Rate Dynamics: With inflation above target and fewer cuts:
TIPS: Historically outperform nominal Treasuries when inflation is persistent. This logic was straightforward: TIPS safeguard real returns in mildly inflationary conditions.
Short-Duration Bonds over Long-Duration: When the Fed isn’t cutting aggressively, and inflation is sticky, long-duration bonds suffer from rising real yields and uncertain inflation. Short-duration instruments are less sensitive to interest-rate changes and historically have lower drawdown risk in uncertain inflation periods.
Logic: Basic fixed-income principles and historical yield curve responses to uncertain monetary policy shaped these bond-related investment calls.
6. Structural Changes & CRE Weakness: The data on office vacancies (~20%), hybrid work, and higher construction costs from tariffs suggested ongoing challenges for office-focused CRE. Historically, commercial real estate that loses demand due to structural shifts (like the decline in demand for large office spaces post-pandemic) sees multi-year price declines.
Logic: Drawing on historical real estate cycles and the current structural shift (remote/hybrid work), office REITs and related instruments remain in the “worst” category.
7. International Exposure and Global Uncertainties: Companies heavily reliant on exports or foreign tourist spending (e.g., luxury brands dependent on Chinese demand) face a double hit: retaliatory tariffs reducing export volumes and slower global growth.
Logic: Past trade war episodes (2018-2019) showed that multinational manufacturers and luxury consumer firms lagged domestic-focused peers. This experience guided the logic for ranking these investments lower.
8. Crypto Regulatory Clarity: Regulatory clarity historically reduces risk premiums and encourages institutional adoption. For example, when the U.S. clarified certain stablecoin rules or when futures-based Bitcoin ETFs launched, crypto assets (especially large-cap tokens) received more capital inflows. Stable or slightly bullish conditions, absent major rate cuts, still allow moderate crypto gains due to new entrants and lowered regulatory uncertainty.
Logic: Given improved legal frameworks and possible U.S. strategic interest in digital assets (e.g., Bitcoin reserve talk), crypto sees moderate net inflows and price appreciation, though with volatility.
9. Odds & ROI Reasoning: The odds of outperformance or underperformance, and the estimated ROI ranges, derive from a combination of:
Historical averages (e.g., defensive outperforming by a few percentage points in late-cycle conditions).
Typical sector responses to tariff-induced cost changes (e.g., margins contracting by 100-200 bps for import-reliant retailers).
Industry studies on technology adoption rates under favorable policies (e.g., EV adoption soared with tax credits and supportive infrastructure, suggesting AV/AI sectors can see double-digit revenue gains).
Market reaction patterns to Fed policy surprises: If the market expected more cuts but gets fewer, sectors sensitive to discount rates (profitless tech) historically drop by double digits, while defensives hold steady or gain.
Logic: These estimates are not arbitrary; they reflect the magnitudes of change observed in past similar conditions. For instance, a 10%-15% gain for defense/AI contractors aligns with historical R&D-driven outperformance and stable government budgets. A -5%-15% drop for certain profitless growth tech aligns with past market corrections in similar monetary environments.
Breakdown of the Logic
The logic behind these predictions is a synthesis of historical analogies, direct policy signals, economic theory on inflation and rates, well-documented sector rotation patterns, and the specific tariff and regulatory environment outlined by current data.
Macro Conditions → Sector Preferences: Slower growth, persistent inflation, fewer cuts → Defensive & stable dividend payers win, speculative growth loses.
Tariffs → Domestic Winners & Import-Dependent Losers: Local supply chains and resource producers benefit; import-reliant retailers and multinational exporters struggle.
Policy Priorities → Tech and Defense Gains: Government prioritizing AI in defense and AV regulations → structural tailwinds for those sectors.
Inflation & Rates → Fixed Income Choices: Stubborn inflation and fewer cuts → TIPS and short-duration bonds preferred over long-duration bonds.
Structural Changes → CRE Weakness and B2B Cuts: Office RE and related suppliers suffer due to secular shifts in work patterns and corporate spending restraint.
Historical Parallels & Statistical Norms: Corrections, sector rotations, and performance spreads based on numerous historical late-cycle scenarios and previous tariff episodes guide confidence and ROI ranges.