In its recent report, Top 10 Thematic Strategies for 2025, the Edward Stanley team at Morgan Stanley offers an in-depth analysis of the sectors that could become investment hotspots over the next year. Amid a rapidly changing global economic landscape, here are the top 10 trends investors should pay attention to:

1. Strong Economic Growth in India

Morgan Stanley forecasts that India’s economy will continue to shine as a standout emerging market in 2025, with GDP growth projected to reach 6.5%. Key drivers include strong domestic consumption, improvements in the rural economy, and increased public and household capital spending. Additionally, the solid balance sheets of Indian companies and financial institutions, along with ample policy space, provide a stable foundation for sustained economic growth.

2. Increased Defense Spending in Europe

Morgan Stanley expects European defense budgets to continue rising, driven by factors such as reduced reliance on U.S. defense support, efforts to compensate for decades of underinvestment, and the military shortages sparked by the Russia-Ukraine conflict. The report predicts that Europe will increase defense spending by over $2 trillion in the coming years to address past investment gaps, with NATO member countries likely to follow the U.S. lead in raising defense spending ratios, further fueling this trend.

（source：wallstreet）

3. Revival of Mergers, Acquisitions, and IPO Activity

With interest rates declining and market conditions improving, Morgan Stanley anticipates a recovery in global M&A and IPO activity in 2025. M&A deal announcements are expected to increase by 50% year-over-year, bolstered by low interest rates and strong stock market performance. A rebound in business confidence will further support this trend, with M&A activity in Europe projected to rise by as much as 49%.

（source：wallstreet）

4. Reshoring of U.S. Manufacturing

Morgan Stanley notes that the U.S. is in the early stages of reindustrialization, offering long-term opportunities worth up to $10 trillion. U.S. manufacturing, which has seen a significant decline over the past two decades, is now better positioned to attract new factory construction due to increased global manufacturing capacity and structural reforms. This trend is expected to gradually improve America’s self-sufficiency in the coming decades.

5. Nuclear Energy Revival

Nuclear energy's potential to address decarbonization and energy security is receiving renewed attention. Morgan Stanley predicts that by 2050, nuclear energy’s share of global electricity supply will rise from 12% in 2022 to 17%. The development of small modular reactors (SMRs), financing innovations, and the push for carbon-neutral goals are expected to bring over $1.5 trillion in investment opportunities to the nuclear sector. The five major trends driving nuclear energy revival include COP28 targets, AI support, financing models, construction risks, and SMR technology development.

6. Emergence of Negative Electricity Prices

As renewable energy capacity continues to grow, negative electricity prices are becoming more common in Europe. While this phenomenon poses risks for renewable energy developers, it also presents new opportunities for grid infrastructure development. Companies involved in flexible power generation, such as storage and smart grid firms, stand to benefit, particularly by storing electricity during negative price periods and releasing it during peak times to generate profit.

7. AI Revolution in the Financial Industry

Artificial intelligence is rapidly transforming the financial industry, especially in banking and insurance. Morgan Stanley notes that the application of AI in finance will expand across areas such as risk management, customer service automation, and investment advice optimization, providing significant investment opportunities for financial stocks. Studies show that 27% of financial firms have already seen notable business improvements through AI.

（source：wallstreet）

8. Early Exploration of Quantum Computing

Though still in its early stages, quantum computing is expected to have a profound impact in the future. Morgan Stanley highlights the potential for quantum computing to provide new opportunities in areas like post-quantum encryption, cybersecurity, and telecom, satellite, and network infrastructure. The firm advises companies and governments to prepare for potential security challenges arising from this technology.

9. Rise of AI Agent Technology

Generative AI has made significant progress over the past two years, and in 2025, AI agents (Agentic AI) are expected to become the new focus of development. This technology will shift AI from a passive response model to an active problem-solving and productivity-enhancing tool. AI agents will be able to predict user needs and automatically complete tasks, greatly enhancing efficiency for businesses and individuals. Morgan Stanley predicts that this trend will have a multi-trillion-dollar economic impact on the enterprise software market.

10. Market Potential of Oral Weight Loss Drugs

Following the supply shortage of injectable GLP-1 drugs in 2023, the obesity drug market faced a bottleneck. However, Morgan Stanley anticipates that the launch of oral GLP-1 drugs in 2025 will reignite market interest, potentially making obesity medications one of the largest single categories in the pharmaceutical industry. Additionally, with growing consumer health awareness, investments in health foods and related sectors are also expected to benefit.

Conclusion

These trends not only present strategic opportunities for investors in the coming year but also showcase the profound impacts that global economic shifts and technological advancements may have on markets worldwide.