Citi Research’s Drew Pettit expressed an optimistic outlook for the macroeconomic landscape in 2025, emphasizing the role of artificial intelligence (AI) in driving growth across various industries, while cautioning about inflation and the need for selective investments. He highlighted Marvell Technology as a promising opportunity in the semiconductor sector, projecting significant growth in its AI-related business, particularly due to its partnership with AWS.
In a recent discussion, Citi Research’s Drew Pettit shared an optimistic outlook for the macroeconomic landscape heading into 2025, particularly emphasizing the significance of artificial intelligence (AI) in driving growth. Pettit highlighted that AI productivity gains and strong fundamentals for the S&P 500 are expected to help navigate potential volatility in the market. However, he also cautioned that inflation is still a concern, and while there is good news, much of it is already reflected in current valuations.
Pettit noted that the AI narrative has been a dominant theme in the market for over a year, but he believes that the focus will expand beyond just the foundational companies that provide AI technology. He pointed out that the trade is likely to broaden to include companies that utilize AI, such as those in the automotive sector working on autonomous driving, as well as more cyclical businesses. This shift indicates a growing recognition of AI’s potential across various industries.
While acknowledging the transformative potential of AI, Pettit also expressed a cautious perspective, drawing parallels to past technological advancements like fiber optics, which, despite their promise, led to financial failures for some companies. He emphasized the importance of being selective in investment choices, particularly focusing on companies that are not overvalued and are positioned to benefit from AI without being priced for perfection.
One specific opportunity Pettit highlighted is Marvell Technology, a semiconductor company that is developing custom AI chips. He pointed out that Marvell’s AI-related business is projected to grow significantly, with an anticipated increase of nearly 200% next year and an additional 60% growth the following year. This positions Marvell as an attractive investment within the semiconductor sector, especially as the industry is expected to perform well in 2025.
In conclusion, Pettit underscored the importance of identifying companies that can capitalize on the AI trend while avoiding those that may be overhyped. He believes that Marvell’s unique offerings, particularly its partnership with AWS, set it apart from competitors like NVIDIA, making it a compelling option for investors looking to tap into the AI growth story in the coming years.