Editor’s Note: Smart investing isn’t about chasing the hottest stock of the moment—it’s about riding the unstoppable wave of megatrends shaping our future.

From renewable energy to artificial intelligence (AI), these transformative forces aren’t just buzzwords; they’re blueprints for building lasting wealth. Below, I dive into three megatrends driving tomorrow’s profits today.

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1. Artificial Intelligence and Technology Integration

The phrase “artificial intelligence” has been omnipresent in 2024. However, don’t mistake AI for a passing trend, like bell-bottom jeans or NFTs.

AI represents a seismic shift in how society functions—think the Industrial Revolution but with chatbots instead of coal.

AI isn’t just automating processes; it’s reshaping industries. Health care companies are using AI to predict patient outcomes. Financial firms are leveraging it for fraud detection and high-frequency trading. Even your favorite streaming service knows exactly which guilty-pleasure action movie to recommend next.

According to the firm Market Research, the global market size of artificial Intelligence is projected to be worth about USD 2.3 trillion by 2032 from USD 152.8 billion in 2023, growing at a compound annual growth rate (CAGR) of 36.8% during the forecast period from 2023 to 2032 (see chart).

Investment Plays

Here’s how you can hitch a ride on this AI-driven rocket:

• Big Tech Giants: Companies like NVIDIA (NSDQ: NVDA) and Microsoft (NSDQ: MSFT) are at the epicenter of AI development. NVIDIA’s GPUs remain the gold standard for machine learning, while Microsoft’s integration of OpenAI’s technologies has cemented its leadership in the enterprise AI space. The share prices of the megacap players have gotten pricey, sure, but they have further to run in 2025.
• Sector-Specific Innovators: Watch for companies bringing AI to niche industries. Keep an eye on undervalued, smaller companies that are picks-and-shovel plays on AI.
• AI ETFs: If you prefer a simpler and safer route, consider exchange-traded funds (ETFs) like the Global X Robotics & Artificial Intelligence ETF (BOTZ). It offers diversified exposure to the AI boom without the headache of individual analysis.

Avoid the froth and keep an eye out for hype. Not every AI stock is a winner. Remember when everyone thought blockchain would solve world hunger? Focus on companies with proven use cases and revenue streams, not just buzzwords.

2. Private Credit Expansion

If private credit were a party, it’d be the exclusive rooftop bash everyone wants an invite to—glitzy, a little mysterious, and full of big players. The private credit market, currently valued at over $1.5 trillion, is the quiet workhorse of the financial world, providing loans where traditional banks fear to tread.

Borrowing from banks has become less appealing for many start-up businesses, while investors are chasing the juicy yields offered by private credit funds. And unlike public markets, private credit isn’t a rollercoaster every time Jerome Powell sneezes.

Investment Plays

Want in on this action? Here’s where to look:

• Direct Lending Funds: Firms like Blackstone (NYSE: BX) and Apollo Global Management (NYSE: APO) have robust private credit arms. Their funds provide direct loans to middle-market companies, offering attractive risk-adjusted returns.
• Fintech Enablers: Platforms like Affirm (NSDQ: AFRM) are benefiting indirectly, using private credit backing to scale their operations. Just make sure the underlying fundamentals align with your risk tolerance—not all fintechs are created equal.
• Private Equity Crossovers: Some private equity firms double as private credit giants. Carlyle Group (NSDQ: CG) and KKR (NYSE: KKR) are prime examples of players making waves in both arenas.

Word of Caution

Private credit isn’t as liquid as your garden-variety S&P 500 fund. Be prepared to lock up your capital for several years. And don’t forget to scrutinize the credit quality of underlying borrowers—defaults happen, even at exclusive parties.

3. Geopolitical Developments and Energy Demand

Global conflicts and geopolitical posturing: the investment gifts that keep on giving. As energy demand skyrockets, investments in energy infrastructure are more critical than ever. Unless you’re planning to power your house with good vibes and fairy dust, fossil fuels and renewables alike are here to stay.

From Russia’s antics in Ukraine to Middle Eastern tensions, energy remains a geopolitical chess piece. President-elect Donald Trump has vowed to launch a trade war, which is likely to inflame regional tensions and reignite inflation. China’s aggressive push for resource dominance only adds to the stew. For investors, these factors spell volatility—and opportunities for those who know where to look.

Where to Invest

Energy isn’t just about oil rigs anymore. Here’s your map:

• Oil & Gas Giants: ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) are no-brainers. Despite the push for renewables, these companies are investing heavily in natural gas and carbon capture technologies.
• Renewables Renaissance: Companies like NextEra Energy (NYSE: NEE) are leading the charge in wind and solar. The global transition to clean energy is slow but inevitable.
• Infrastructure Plays: Pipelines, storage facilities, and LNG terminals are crucial to meeting rising energy demand. Look at firms like Kinder Morgan (NYSE: KMI) or Cheniere Energy (NYSE: LNG).
• Geopolitically Shielded Producers: Countries less prone to conflict, like Canada, are becoming more attractive for energy investments. Think companies like Enbridge (NYSE: ENB).

Avoiding Pitfalls

Timing is everything in the energy sector. Be wary of chasing enthusiasm around renewables without considering the slow pace of adoption. Similarly, don’t write off fossil fuels entirely—they’ll be around longer than your cousin’s vegan phase.

The Convergence: Why Diversification is Key

In an increasingly complex and interdependent world, trends do not unfold in isolation. They influence, amplify, and, at times, challenge each other, creating a dynamic ecosystem where opportunities lie at the intersections.

The aforementioned three megatrend trends don’t live in silos. AI will drive efficiencies in energy production. Private credit will fund the next wave of tech startups. Geopolitical shifts will create new markets for AI and renewables alike. The future isn’t about picking one horse; it’s about assembling a stable.

Portfolio Management Tips for 2025

• Blend Growth and Stability: Pair high-growth sectors like AI with less volatile income generators like private credit funds.
• Global Perspective: Don’t overlook international opportunities, especially in emerging markets poised to benefit from these trends.
• Risk Management: Use ETFs and diversified funds to spread your bets across multiple players in each trend.

Investing in 2025 isn’t about crystal balls or tea leaves. It’s about recognizing the megatrends shaping our world and positioning yourself to profit.

Whether you’re bullish on AI, intrigued by private credit, or cautiously optimistic about energy, the opportunities are there. Just don’t be the person who looks back and says, “I should have invested in these megatrends sooner.”

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John Persinos is the editorial director of Investing Daily.

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