Capital Investment Set to Become a Megatrend Powering the Future

Capital investment is poised to become a major force shaping the future, driving critical global trends such as artificial intelligence, power infrastructure and security.

According to JPMorgan Private Bank’s 2025 Global Investment Outlook, businesses and governments are now positioned to increase spending on capital investments due to elevated margins, rising profits, increased c-suite confidence and growth-focused policy measures.

Therefore, strategists anticipate a surge in capital investment within the power sector, fueled by the reindustrialization of US manufacturing, the push for electrification in clean energy solutions, and the growing demand from data centers.

This strong investment backdrop is not limited to the US, as Japan is also leading several of these structural trends, driving expectations of heightened capital investment there as well.

Looking ahead at other pivotal themes likely to influence market dynamics in the upcoming year, strategists expect that more investors will be interested in European global giants as they offer resilience and opportunities for returns.

Despite Europe’s productivity challenges, JPMorgan Private Bank says the top European companies warrant attention in 2024.

Notably, the 50 largest European companies only generate around 40% of their revenues within Europe, positioning these “national champions”  as true global players.

Erik Wytenus, Europe, Middle East, and Africa head of investment strategy, said:  "While 'US exceptionalism' is a theme with sound rationale, we also advocate complementing US positions with international diversification, including in Europe, which is aided by the ECB's policy easing."

Innovation is also set to accelerate in 2025 as the industry explores new frontiers such as evergreen alternatives, sports, space and urban development, according to the outlook.

Open-ended evergreen alternative funds are rising in popularity, accounting for 50% of JPMorgan Private Bank’s alternative commitments in 2024, which is three times the share compared to the previous year.

While these strategies may not be central to every portfolio, strategists highlight their potential to deliver growth and diversification in a rapidly changing landscape.