TD Cowen Research Themes 2025

By some estimates, in the U.S. alone, the retail wealth segment represents US$150 trillion in assets under management, of which only about 3% comprises private investments. A shift is underway in the asset management space, centered around the push to bring private investing to a mainstream audience. This democratization movement stands to open a massive new segment of the market at a time when fund raising from institutions has slowed.

For the first time in over a decade, the U.S. electricity load is experiencing a significant resurgence in demand, driven by the growth of data centers fueled by Generative AI (GenAI) and the accelerating adoption of electric vehicles (EVs). The response to rising electricity demand involves a mix of short-term and long-term strategies. The political landscape will shape how the U.S. navigates these challenges.

New obesity medicines and their groundbreaking efficacy have dominated the headlines, but the broader and lasting implications of these breakthrough treatments remain uncertain. We expect that the ripple effects from obesity medicines could start to become clearer in 2025 as new conditions are added to the labels, supply ramps, reimbursement and coverage are broadened and more data and new agents emerge.

Geopolitical interests are increasingly interdependent rather than neatly separated into blocs, and the post-Cold War hegemony enjoyed by the United States is no longer unchallenged. Additionally, the spectrum of battlefield technologies is the widest it has been in history. Defense budgets are contending with World War II-style ground wars on the one hand, and cyber and space threats on the other.

As Donald Trump becomes the 47th president of the United States, a strategy rooted in unpredictability is emerging. His "peace through strength" doctrine is expected to have significant global implications for U.S. defense strategy and spending. The new administration has made unconventional picks for key health care leadership positions. There will certainly be disruption and change, but it is likely to be considerably less radical than some of the early rhetoric suggests.

The pace and breadth of demographic shifts will have profound investment implications. Shifting demographics continue to be a critical backdrop for investors. TD Cowen's Monthly Tracker surveys provide a timely view of these shifts in the United States, and our new China survey provides similar insight on trends impacting consumer behavior in that country.

As the U.S. continues its efforts to shift away from reliance on China, a significant reorientation of global supply chains has begun. This shift, driven by ongoing trade tensions, supply chain disruptions, and national security concerns, is prompting companies to seek alternative manufacturing hubs and reduce their exposure to Chinese production.

TD Cowen estimates AI deployments could save more than 15% of U.S. labor costs and potentially replacing up to 20% of worker tasks for 80% of the workforce in the U.S. alone. However, we believe the pace of AI deployment will continue to be moderated by infrastructural limitations. We estimate more than $1 trillion in capex will be deployed to further develop the next wave of AI technologies

Space is materializing as a frontier for commercial services, tourism and potentially even mining the rich resources of asteroids. The Space Race is also producing some of the most frightening new warfare capabilities in history. We monitor how space warfare may be regulated, how rapidly space industry costs decline, government spending and the continued migration of critical space functions from the government to commercial enterprises.

The U.S. leads its peers in biomedical research spending and is often on the cutting edge of new medicines. China also has made biomedical research a key pillar of its future growth. The spoils of that investment are evident in China's emerging biomedical innovation ecosystem. We expect that investments in domestic pharmaceutical manufacturing and tools to improve biothreat preparedness will be key focus areas over the coming years.

Security compromises yielded a victim count of more than one billion people in the first half of 2024 alone and have touched prominent organizations and brands, with far-reaching consequences and mounting costs. Tightening regulatory frameworks are also amplifying the growing focus on corporate cybersecurity programs. We believe the operational technology arena is likely to experience rapid growth in the coming decade.

Large chronic diseases are a key priority for drug developers, with the potential to unlock multiple billion-dollar markets in 2025 and beyond. Additionally, as established medicines in oncology continue to move earlier into the treatment paradigm, this will enable greater adoption of new diagnostic tools to better target treatments and improve duration of therapy, as well as the potential to identify patients at risk of progression and provide earlier intervention.

Consistent bulk electricity generation throughout the day makes nuclear power generation a particularly attractive option for meeting data center, electric vehicle, and other artificial-intelligence-related energy needs. We expect traditional and emerging forms of nuclear power to play an important role in meeting global energy needs in the coming decades, and we see a renaissance in nuclear power accelerated by the needs of AI deployments.