Quantum, Palantir, Trump: January trends to watch

2025 is here, and January is already kicking off with a fresh wave of market activity. Let’s take a closer look at some of the key trends and opportunities to keep on your radar this month.

Quantum leaps

In the wake of the AI boom, investors are turning their attention to quantum computing stocks, eager to capitalise on what some are calling “the next tech revolution.” The technology’s potential to transform industries such as healthcare, cybersecurity, climate modelling, and defence has fuelled growing excitement.

On 9 December 2024, Google unveiled Willow, a groundbreaking quantum chip capable of solving in just five minutes problems that would take conventional supercomputers 10 septillion years (that is a 1 followed by 25 zeros). The announcement sent shockwaves through the market, igniting a surge in quantum-focused stocks.

Leading the rally are Rigetti Computing (RGTI:US), D-Wave Quantum (QBTS:US), and IonQ (IONQ:US), with Rigetti skyrocketing over 1,500% last year. Investors seeking broader exposure to this trend are also eyeing the Defiance Quantum ETF (QTUM:US), which counts Rigetti, D-Wave, and IonQ among its top holdings.

Despite the excitement, significant challenges and risks remain. Large-scale, impactful applications of quantum computing may still be years or even decades away, and many of the industry’s promises have yet to materialise.

What’s next for Palantir?

Palantir Technologies (PLTR:US) has been in the spotlight recently, emerging as the S&P 500's top-performing stock of 2024 with an astounding 330% gain, nearly double NVIDIA's 170% return. In December, Palantir was among the top five most-traded stocks on the CMC Invest platform. Renowned for its advanced big data analytics and AI capabilities, Palantir's platforms, including Gotham, Foundry and its Artificial Intelligence Platform (AIP), support real-time decision-making in commercial and government contexts. 

The company’s Q3 earnings revealed a 30% revenue surge and a doubling of net income, with CEO Alex Karp stating, “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won't slow down.” Approximately 44% of Q3 sales came from U.S. government clients, including the Department of Defense.

However, questions linger about whether this momentum can be sustained, given its astronomically high P/E ratio of 378.15 compared to other AI players like Tesla (110.64), NVIDIA (52.87), and Meta (27.62). As Palantir continues to expand into commercial markets, 2025 will be a pivotal year to determine whether its valuation and stock performance are sustainable. Palantir's trajectory from here could be a key indicator of sentiment shaping the broader AI narrative.

^{Chart: Palantir stock (as of December 31, 2024), Source: TradingView/CMC Invest}

Trump takes the reins

Donald Trump is set to issue over 25 executive orders and directives on January 20, his inauguration day. It is common for new presidents to act swiftly through executive orders. For instance, President Joe Biden signed 17 such orders on his first day in 2021, many aimed at reversing Trump-era policies.

During his first 100 days, Trump’s priorities are expected to include immigration reform, trade policies focusing on tariffs against China, and energy initiatives. Another key area of interest will be the views and potential policy direction of his new SEC commissioner pick, Paul Atkins, particularly regarding Bitcoin and cryptocurrency. Trump’s proposal to create a Department of Government Efficiency (DOGE), designed to reduce costs, could generate significant media attention and political resistance. These initiatives are being closely monitored for their potential effects on U.S. financial markets. 

Here are some sectors we’ll be watching in Trump’s first 100 days:

• Oil and Gas – ConocoPhillips (COP:US) and Buffett's high-conviction pick, Occidental Petroleum (OXY:US), stand out amid the potential impacts of energy policy shifts.

• Defence – Lockheed Martin Corp (LMT:US) and RTX Corp (RTX:US) given potential changes in policy and evolving geopolitical situations worldwide.

• Technology – Apple Inc. (AAPL:US) and Tesla Inc. (TSLA:US) could face headwinds due to their reliance on China for manufacturing and revenue.

• Cryptocurrency – Bitcoin (BTC/USD), Ethereum (ETH/USD), and Solana (SOL/USD) could be buoyed by Trump’s favourable stance on cryptocurrency, potential policy developments in the sector, and discussions around a ‘strategic Bitcoin reserve.’ 

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