Predicting what will happen in markets is difficult, so I decided to see what AI had to say.
I asked ChatGPT what 2025 has in store for stocks, rates, bitcoin, and more.
The chatbot believes the S&P 500 will be in for another positive tech-driven year.
Many try, but few succeed in correctly predicting the market — even among Wall Street analysts who do it for a living.
Take the S&P 500, for example. The index closed 2024 at 5,882, cementing a second year of more than 20% gains. Yet this time last year, Wall Street's 2024 median year-end price target was just 4,850, according to Bloomberg data. Not exactly close.
Since experts are so often wrong, I figured it wouldn't be a bad idea to put Big Tech's trillion-dollar baby to work and ask AI for its predictions on the economy and markets going into 2025.
Will the S&P 500 have a third year of standout returns? How many times will the Federal Reserve cut interest rates in 2025? Will bitcoin go to the moon? Can a chatbot put top analysts out of a job? We'll find out in 12 months.
The S&P 500 will end the year at 6,500
Christine Ji
There's been debate over whether the S&P 500 can continue its upward climb for a third year in a row, but ChatGPT seems to believe it will. The chatbot gave me a bullish forecast of 6,500 by 2025 year-end, citing robust corporate earnings growth and historic growth trends. With this estimate, ChatGPT joins the likes of big banks like Goldman Sachs, JPMorgan, Citi, and Morgan Stanley. The median price target among Wall Street strategists is 6,600, according to Bloomberg data.
2025's top sectors will be information technology, healthcare, and consumer discretionary
Christine Ji
ChatGPT's top sector picks for 2025 include information technology, healthcare, and consumer discretionary.
If I were an AI chatbot, I would bet on the technology sector, too. Jokes aside, tech outperformance is hardly a hot take, given how the AI megatrend drove markets in 2024. 2025 could be another big year for semiconductors, software, and IT services. ChatGPT was also bullish on the continued strength of the American consumer going into 2025.
Additionally, ChatGPT showed a preference for the underdog: healthcare was largely neglected by investors in 2024 and returned less than 1%. But the chatbot cited biotechnology developments, demand for pharmaceutical drugs like GLP-1 medications, and an aging population as catalysts for the sector.
The Fed will cut rates 2-3 times in 2025
Christine Ji
ChatGPT couldn't commit to a singular answer here, predicting two or three rate cuts in 2025 for a target rate of 3.5%-4% at year-end.
For context, the Fed has indicated that they expect to cut rates by 50 basis points in 2025, most likely in the form of two rate cuts. Markets, meanwhile, are pricing in a single rate cut as the most likely outcome for 2025, according to the CME FedWatch tool.
Inflation will stabilize in between 2.5%-3%
Christine Ji
If there's one thing American consumers hate, it's inflation. With prices up significantly over the last few years, voters listed the economy as their top concern coming into the 2024 election.
ChatGPT doesn't think 2025 will be the year when inflation is fully defeated, predicting that it would hover around the same levels as 2024. The chatbot said slowing wage growth and stabilizing energy prices will prevent inflation from getting out of control, but price gains will remain elevated.
Some Wall Street economists have given estimates within this ballpark, with UBS estimating 2025 year-end inflation to be 2.6%. Others are more optimistic — Goldman Sachs believes inflation will fall to 2.1%.
As of November 2024, CPI data showed that prices had risen 2.7% in the 12 months prior.
Bitcoin will hit $125,000
Christine Ji
It turns out ChatGPT is a bitcoin bull. It predicts that bitcoin will continue its ascent and end the year in six-figure territory.
ChatGPT said increased institutional inflows to the asset will boost demand and liquidity. It also believes there are expanding use cases for bitcoin as a strategic asset for corporations (see: Microstrategy), or day-to-day transactional currency.
Market predictions are hard to get right, but the price of bitcoin is especially difficult to forecast. The cryptocurrency doesn't have any cash flows on which to base a valuation. Instead, much of bitcoin's price is contingent upon its widespread adoption. The price has been subject to volatile swings in excess of 70% to the downside and even wilder swings upward.
As a result, bitcoin price targets are looking suspiciously similar to randomly generated numbers. Forecasters are giving estimates ranging anywhere from $45,000 to $500,000.
I recently added bitcoin to my portfolio, so I'm hoping ChatGPT — or the analyst with the $500,000 price target — is proven correct.
Заместитель управляющего Отделением Фонда пенсионного и социального страхования Российской Федерации по г. Москве и Московской области Алексей Путин: «Клиентоцентричность - наш приоритет»