AI Monetization: The Growth Engine for Tech Stocks in 2025

AI-driven earnings growth is poised to become a critical driver for tech stocks in 2025, according to Barclays strategists led by Venu Krishna.

Key Highlights:

1. 2023-2024 AI Impact:

   • AI narratives boosted equity returns significantly, with global AI stocks delivering 16.5% year-to-date returns compared to the MSCI ACWI Index's 6% returns.
   • Gains thus far have been concentrated in hyperscalers (like Big Tech) and semiconductor companies.

2. Software Sector's Surge:

   • Recent advancements, including generative AI co-pilots and Agent AIs, have propelled the software sector to outperform foundational hardware and hyperscalers.
   • Barclays predicts higher EPS growth in software stocks, driven by new AI functionalities and wider adoption.

3. AI Monetization Prospects:

   • Emerging AI applications promise significant productivity gains, creating new revenue streams and higher valuations in the tech sector.
   • Analysts see this as a key barometer for tech stocks, catalyzing sustained growth.

Relevant Data Insights:

• Market Biggest Gainers API:

  • This API can track the biggest gainers in the market, providing insights into how stocks within sectors like technology and infrastructure have been performing amid the stimulus.

• Sector Historical API:

  • This API offers a look into sector performance over time, useful for analyzing how market trends have shifted in response to similar fiscal measures in the past.

Market Context:

The shift to AI comes amid broader economic uncertainties, such as the Federal Reserve's recent rate cuts and declining crude oil prices. The Nasdaq 100, dominated by tech, fell 0.4% on Tuesday, signaling market caution ahead of central bank decisions.