2 Things Wall Street’s watching in 2025

2024 wrapped in the green. 📈 Looking back at last year, the S&P 500 surpassed expectations, soaring 23% largely due to ‘AI enthusiasm and the tech sector’. And many Hatch investors were right alongside them. The Nasdaq 100 climbed nearly 25%, also fuelled by AI and Nvidia’s all time highs. 

‍S&P 500 vs Nasdaq 100. 👩💻 Over 10 years, both indices have benefited from Big Tech stocks’ significant growth, mirroring each other's up and down climb:

While the Nasdaq 100’s tech-heavy weighting may make it more vulnerable to an ‘AI bubble’, since 2015 the index has had an average annualised return of around 17.8%. This compares to the S&P 500’s 10-year average annual performance of around 13.3%

1. Wall Street’s most anticipated IPOs of 2025

Could 2025 be the year of the IPO comeback? 🤔 2025 may be shaping up to see the return of IPOs, with the spotlight on fintech and tech. And now that crypto’s found favour with the incoming president, some crypto-adjacent companies may also IPO this year. 

‘IPOs, on average, are likely to be larger in size perhaps than they ever have been’ — Brian Friedman, president of Jefferies, Reuters

Official Public Offerings (IPOs) are one way a company goes public on share markets so anyone can own shares in them. 2021 set records for IPOs with 1,035 companies listing on the US share markets — which compares to just 181 IPOs in 2022, and 154 in 2024. After the two-year IPO winter, many investment firms are ready to get going. 🥶

2024’s high profile IPOs. 🔍 Last year, Reddit (RDDT) successfully listed on the NYSE, semiconductor-based solutions company Astera’s (ALAB) had a ‘stellar Nasdaq debut’, and a few months after uranium prices soared, Nano Nuclear Energy (NNE) also ‘performed exceptionally well’ on the Nasdaq. However, none made last year’s top five performers, which were taken out by Lineage (LINE), Viking Holdings (VIK), StandardAero (SARO), Amer Sports (AS), and UL Solutions (ULS).

‍This year’s Wall Street’s IPO picks. 📅 While it appears that a SpaceX IPO ‘is off the table for now’, (and perhaps along with it, the new proposed Texas Stock Exchange) many notable companies have been earmarked to IPO in 2025:

• Canva — IPO rumours have swirled for a few years around the Aussie start-up, which is valued at a possible US$40 billion, and in November they hired the CFO who took Zoom public 
• Chime — the digital banking app valued at between US$5-25 billion in 2021 filed forms with the US Securities and Exchange Commission (SEC) in December 2024 to IPO
• CoreWeave — the AI cloud platform is valued at around US$19 billion and has set their IPO target valuation at US$35 billion
• Discord — the 10-year-old San Francisco-based community platform popular with gamers was valued at around US$15 billion, and has diversified their portfolio in what appears to be IPO prep
• Klarna — the diversified Swedish buy now pay later company is part-owned by Softbank (SFTBY - ADR) and is valued at US$6.7-20 billion. They’ve submitted IPO registration to the SEC
• Revolut — the UK digital banking app has been valued at US$33 billion and because they were refused a UK banking license, the founding team is potentially seeking ‘to launch in New York’
• Shein — the global fast fashion behemoth, valued at US$66 billion, ‘confidentially filed to launch’ on the US share markets
• StubHub — after postponing their IPO last year, the California-headquartered ticketing marketplace, which is targeting a US$16.5 valuation, may get their IPO off the ground in 2025
• Stripe —  the Dublin and San Francisco-based fintech has allegedly been ‘dangling the prospect of a public offering since 2021’ and is valued at up to US$65 billion

Other companies that have shown IPO potential for 2025 include BMC, Cerebras, Databricks, Element Biosciences, Hinge Health, Intel’s Programmable Solutions Group, Impossible Foods, Liquid Death, Medline, Panera Bread, Plaid, Reliance Jio, Sailpoint, ServiceTitan, Skims, Snyk, SymphonyAI, Turo, and Venture Global, Zopa.

2. Could quantum computing drive AI evolution?

A quick lesson in quantum computing. 👨‍🏫 When quantum computing is optimised, it has the potential to accelerate AI processes and applications. 

• Classical computing — is what we’ve become used to on our laptops, tablets and smartphones. These are the everyday tools that process ‘bits’ using binary values 0 and 1 
• Quantum computing — uses ‘quantum bits’, known as ‘qubits’ that can represent 0, 1, or both 0 and 1 simultaneously because of these conditions: 
  • ‘superposition’ — meaning quantum computers to process a vast number of possibilities simultaneously
  • ‘entanglement’, when qubits are interconnected no matter how far apart they are, which enables highly complex calculations at speed
  • ‘interference’, with algorithms that can cancel out incorrect probabilities by amplifying multiple probabilities simultaneously

‍Real world possibilities of quantum computing. 💊 The applications of quantum computing are vast and potentially significant for how we work and live. They may include exponentially speeding up AI machine learning algorithms, simulating molecules at a quantum level to enhance faster drug discovery, vastly improve financial modelling, logistics and supply chains through superpowered problem-solving and in areas like cryptocurrencies and cybersecurity, break and create stronger and more secure encryption.

Quantum computing still faces barriers. 🛑 Qubits are sensitive to their environment, such temperature and vibrations, which can result in data errors, and scaling stable qubits is still a technical challenge. And quantum computers are only in the experimental stage, largely because they’re expensive to build and run.

Quantum computing stocks are considered volatile as the industry is still in the experimental stage, but some companies have had success in overcoming barriers, seeing their stocks lift in 2024:

• IonQ (IONQ) — has demonstrated qubit interconnectivity at room temperature with 99.9% accuracy delivering 36 algorithmic qubits 
• D-Wave Quantum (QBTS) — this January CEO Alan Baratz said that Nvidia CEO Jensen Huang said Nvidia’s Jensen Huang is ‘dead wrong’ about quantum computers being 15 to 30 years away, and said companies such as MasterCard (MA) are currently using their computers
• Quantum Computing (QUBT) — is building manufacturing for quantum computing products and uses ‘a crystalline material called lithium niobate’
• Rigetti Computing (RGTI) — is a quantum hardware supplier and developed the world’s first ‘multichip quantum processor for scalable systems’, and has achieved significant accuracy in quantum operations and has partnerships with HSBC (HSBC - ADR) and Standard Chartered Bank and the UK’s National Quantum Computing Centre and others

Where quantum computing could AI accelerate AI applications. 🤖 Lifecycle investment platform Coatue, which helps tech companies innovate, defined the AI revolution in phases, which has been similarly mirrored in US markets:

Some Big Tech is getting quantum ready — literally. 🦾 Microsoft (MSFT) has said 2025 is the year to become ‘quantum ready’, Nvidia (NVDA) has announced a March ‘Quantum Day’, and late last year Alphabet announced ‘a huge breakthrough with one of its quantum computing chips’, which temporarily boosted IonQ’s and Rigetti’s stocks. Meanwhile, Meta (META) CEO Mark Zuckerberg told Joe Rogan he believes that quantum computing is ‘still quite a ways off from being a very useful paradigm’, which may have prompted this January’s quantum stock sell-off.

Whatever big trends roll out in 2025, Wall Street will be watching. 👀

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‍Like this? 👍 Then you might like: Hatch investors’ 2024 Year in Review 📅