Utilities are seen as a defensive sector that will benefit from AI's power demand and its domestic focus, which shields it from tariffs. Despite underperformance in 2024, the materials sector is expected to rebound due to low starting valuations and potential growth opportunities, especially with concerns about the Chinese economy and commodity prices already factored in. Overall, Wall Street anticipates a broader dispersion of market returns across various sectors and themes in 2025.
Key takeaways:
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- Wall Street firms are optimistic about the financials sector, expecting it to benefit from deregulation and increased mergers and acquisitions under a Trump presidency.
- The information technology sector is expected to remain dominant, driven by advancements in AI technology and robust infrastructure spending.
- Utilities are seen as a defensive sector that will benefit from AI's power demand and have a strong domestic focus, shielding it from potential tariffs.
- The materials sector, despite underperforming in 2024, is anticipated to make a comeback due to low starting valuations and potential growth opportunities.