January 2, 2025
Another Major 2025 Forecast & 2 More Trades for You
Dear Subscriber,
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| By Sean Brodrick |
Yesterday, I shared my number one prediction for 2025.
Extending tax cuts will be the top priority for Republicans. But we’ve all seen how gridlocked Washington can be. That’s why I wanted to follow up with a second forecast.
This one doesn’t need anyone in D.C. to get their way. Even if they remain entrenched and unable to pass any legislation, this trend will continue to push higher … and faster than before.
AI Boom and Robot Zoom
You can read my recent column about how companies are rushing to build data centers.
Private U.S. companies are plowing so much money into data centers that it now leads ALL other categories of industrial construction.
Any market expanding by 19.1% annually deserves attention.
All the major tech companies are diving into AI tech: Meta, Google, Apple, Amazon and others are all throwing billions at it.
One thing AI does is make robots much more usable. This fact coincides with another of President-elect Trump’s top priorities.
He wants to seal the U.S. border on day one of his new term. He needs far less from Congress to accomplish this. And it will have a major consequence.
I expect farmers, among others, will need to turn to robots as much as possible to replace human laborers.
The global robotics market should boom even if he doesn’t make good on that promise.
It reached $71.2 billion in 2023, as reported by Market Research Future. And it’s growing at a CAGR of 18.4%, with the market expected to pass $200 billion by 2030.
The coming labor crunch in America should kick that into higher gear. And AI could accelerate the robotic rollout. That’s simply because AI makes robots much more useful.
How to Play It
There are many ways to play AI, and I cover many of those in my monthly publication, Wealth Megatrends, and my premium service, Supercycle Investor. Two ideas for you to consider are the Global X Robotics & Artificial Intelligence ETF (BOTZ) and tractor maker John Deere (DE).
BOTZ holds 47 stocks that are leveraged to robots and AI in some way. One thing I don’t like is its high 0.68% expense ratio.
But if robots take off, as I believe they will in 2025, it’s a small price to pay for such broad exposure to the robotics industry.
Deere is building robotic tractors, including the fully autonomous 8R farm tractor, driven by AI rather than a farmer behind the wheel.
Plus, Deere, in the second year of selling a crop sprayer, claims it can cut chemical applications by as much as 77% using AI and machine learning.
One thing holding Deere back is high interest rates. Farmers can’t buy what they can’t afford.
But interest rates are coming down, and we are in an easing cycle.
That’s one of the factors that gave Deere a 16% earnings beat in Q3. That said, earnings fell nearly 33% in the fourth quarter. And Wall Street believes Deere’s earnings will decline all next year, too. Maybe.
But with interest rates falling and potentially boosting sales, Deere could still do very well in future quarters.
Plus, if farmers can’t get farm workers, Deere’s automated machines will look VERY attractive, especially if interest rates are coming down.
It’s also true that the stock isn’t cheap, trading at 22.5x 2025 earnings. Again, that’s a function of earnings that Wall Street thinks is going down.
And Deere pays a decent dividend, recently yielding 1.5%. That dividend is forecast to rise 5% per year over the next three years.
Here is a performance chart of the two investments over the past year …
Both BOTZ and Deere made admirable gains in 2024, though BOTZ racked up nearly twice the percentage gains of Deere. I believe they both have much more potential ahead of them.
One more fly in the ointment for Deere is potential tariffs in the new Trump administration.
If Trump does slap hefty tariffs on our trading partners, they could retaliate with tariffs that hurt Deere’s foreign sales.
If that concerns you, stick with BOTZ. If you want to accept higher risk with potentially more reward, buy Deere.
All the best,
Sean Brodrick
P.S. There’s another asset that is catching fire from this interest-easing cycle: Gold. In 2023, the yellow metal jumped 26%. But that’s nothing if interest rates keep falling.
That’s why I convinced my publisher to make everyone who watches this Weiss Ratings Gold Bull Market Summit eligible to claim a Weiss-exclusive 2-gram gold bar.
You just have to watch this presentation before we take it down. Don’t wait.
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