Stock Market Landscape and Strategic Investment Choices (As of February 2025)

A great price may come tomorrow, or it may take five years to appear.
— Charlie Munger

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The year 2025 has begun with a series of overlapping events unfolding simultaneously, making it a particularly challenging start for investors in the stock market. In such an environment, it may be helpful to briefly synthesize key investment themes, identify promising sectors, and assess which stocks are likely to benefit under a Trump administration in the United States.

Of course, this analysis does not claim to provide definitive answers—nor does it suggest that a particular stock or sector is the only viable choice. As always, it is crucial to remember that investment decisions, including those related to equities, rest solely with the individual investor. Therefore, it is essential to thoroughly examine articles like this one, as well as other relevant materials, before making informed choices.

To begin, let’s take a concise look at the various factors currently influencing stock prices.

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[Resurgence of U.S. Isolationism]
  In 2024, with 53% of Republican supporters opposing U.S. involvement in global affairs, isolationism is on the rise. A Trump return could accelerate withdrawals from multilateral agreements like the Paris Climate Accord and WHO, weaken NATO, and halt aid to Ukraine.

  On January 20, 2025, a southern border emergency was declared, launching a large-scale deportation policy. Over 14,000 undocumented immigrants were arrested in three weeks, with military transport planes used for mass deportations. ICE received a daily arrest quota of 75, and enforcement expanded nationwide.

  Sanctuary protections were lifted, expedited removal applied nationwide, and immediate deportation enforced for those lacking two years of residency proof. Federal, state, and local law enforcement gained broader immigration authority.

  Refugee policies also tightened: resettlement programs were suspended indefinitely, TPS revocation was pushed, and DACA’s termination was considered. These measures mark the strongest isolationist shift since the 1930s.

[Decline of Free Trade and the Rise of Nationalism]
  In 2025, deglobalization and protectionism are key economic themes. Concerns over trade wars are growing as the U.S. imposes new tariffs. Nations are strengthening resource nationalism and protectionist policies while diversifying supply chains through the "China Plus One" strategy. Free trade is fading, giving way to nationalism and economic self-reliance.

[Tightening U.S. and Western Pressure on China]
  The U.S. and its allies are ramping up efforts to isolate China. Measures include revoking its most-favored-nation status, imposing 60% tariffs, halting essential imports, restricting investments, and encouraging U.S. firms to exit China. Key supply chains are being relocated to the U.S., while Chinese firms face limits on U.S. asset acquisitions and broader industry sanctions, particularly in semiconductors.

  In the short term, these policies may boost Western manufacturing and job creation. However, they risk long-term economic instability by weakening China’s economy, potentially slowing global growth. Yet, given the larger scale of Western economies, a global recovery is expected.

  Tighter restrictions could hinder China’s technological progress, reinforcing Western dominance. While China will push for self-sufficiency, these efforts may deepen internal divisions and yield limited success.

[China’s Deepening Economic Crisis and Deflation]
  China’s economy is in freefall, largely due to the collapse of its real estate sector, which once accounted for 30% of GDP. Following the Evergrande crisis, property values have plunged, wiping out middle-class wealth. The failure of the "dual circulation" strategy, stalled yuan internationalization, and worsening ties with Global South nations have further weakened growth prospects.

  China now faces persistent deflation, declining GDP forecasts for 2025–2026, and weakening consumer demand. CPI inflation is falling, while local governments struggle with mounting debt. Structural issues—such as an aging population, soaring youth unemployment, shrinking middle class, widening income inequality, and an overreliance on exports—have eroded economic stability. Overproduction, especially in solar panels and consumer goods, along with government suppression of private enterprise, has further drained market vitality.

  Despite its economic troubles, China is engaging in unnecessary border tensions with Taiwan, Southeast Asia, and Korea, while recklessly challenging U.S. naval dominance in the Pacific—reminiscent of Japan before World War II. Meanwhile, the yuan is rapidly devaluing after six consecutive quarters of deflation, leading many in China to prefer using the U.S. dollar over their own currency, mirroring conditions seen in struggling economies.

  Adding to the crisis, 65% of the population—roughly 900 million people—now earn less than 3,000 yuan ($412) per month, a stark indicator of China’s declining economic power.

[Prolonged Ukraine War and U.S.-Russia Ceasefire Talks]
  Recent independent ceasefire negotiations between the U.S. and Russia in Saudi Arabia have excluded Ukraine, sparking backlash from European nations. The U.S. seeks a phased approach, while Trump’s push for direct talks with Putin remains controversial. Despite the possibility of a U.S.-Russia summit, concerns and uncertainties persist.

  Meanwhile, corruption in Ukraine has worsened as the war drags on. The country ranks 104th out of 180 in Transparency International’s Corruption Perceptions Index, with 70% of citizens believing the war has fueled corruption. Cases of overbilling and missing military supplies have compounded existing shortages, further straining Ukraine’s defense.

  By late March 2025, severe shortages of ammunition and air defense systems are expected. Russian artillery fire exceeds Ukraine’s by a ratio of 3 to 1, while Western military aid continues to fall short. Delays in the U.S. Congress’s $60 billion aid package and the EU’s slow arms production are limiting supplies. Losses of experienced soldiers, recruitment struggles, and dwindling weapon stockpiles are further weakening Ukraine’s battlefield position.

[Severe Power Shortages Facing U.S. AI Giants]
 The U.S. power grid is aging, with key infrastructure reaching the end of its lifecycle. Meanwhile, surging demand from AI-driven services is straining electricity supplies. Data center consumption is projected to more than double from 460 TWh in 2022 to 1,000 TWh by 2026, with AI data centers alone requiring an additional 10 GW of power in 2025. By 2030, annual consumption is expected to exceed 5.0 TWh, but grid capacity is failing to keep pace.

 Even with increased power generation, delays in upgrading transmission and transformer equipment have forced data center companies to bypass utilities and strike direct deals with power plants. Regulatory hurdles and permitting delays are further slowing new energy projects, raising the likelihood of U.S. firms relocating data centers abroad.

 Concerns over AI energy constraints are also impacting markets. The rise of China's DeepSeek AI model has intensified fears about U.S. competitiveness, contributing to declines in American energy stocks. Without urgent upgrades, power shortages could weaken the U.S.’s leadership in AI.

[NATO and EU’s Declining Defense Capabilities Since the Soviet Collapse]
  Since the Cold War, Europe has downsized its military while relying on the U.S. to shoulder NATO's defense spending. By 2025, fewer than half of NATO members have met their defense budget targets, leading to severe cuts and a weakened military force.

  European forces face critical shortages in heavy equipment, airborne troops, naval power, logistics, and strategic airlift and refueling capabilities. Ammunition and essential wartime supplies remain inadequate, while 78% of defense procurement depends on non-European firms, exacerbating reliance on external suppliers. Expanding domestic production is crucial but remains challenging.

  Efforts to improve defense readiness include establishing the EU Rapid Deployment Force, expanding joint procurement, and increasing European production capacity. However, obstacles remain: Russia is rebuilding its military at a rapid pace, NATO faces potential weakening under Trump’s presidency, and interoperability issues persist among member states.

[Key Growth Themes and Stocks to Watch]
  The sheer number of global issues is enough to give individual investors a headache. Meanwhile, South Korea faces economic turmoil due to drastic political decisions, with reckless supporters enabling chaos, even storming courts in defense of their leader. The U.S., amid a critical leadership transition, is also drifting under indecisive bureaucrats.

Yet, the stock market moves forward regardless. Some sectors and stocks will continue their upward trajectory, especially under Trump’s administration. Based on the current landscape, let’s identify key themes and stocks poised for sustained growth during his term.

[A. Stocks Related to U.S. Power Shortages and Aging Infrastructure]
  By now, most investors understand that AI-IDC (AI data centers) consume massive amounts of electricity. However, fewer realize that the U.S. power infrastructure remains stuck in the 1960s-70s, with critical transmission equipment nearing the end of its lifespan. A major overhaul is needed.

  Efficient long-distance transmission requires ultra-high voltage to minimize energy loss, followed by step-down transformation for local distribution. The core components in this process are high-voltage transformers and transmission cables—industries dominated by South Korean companies, which control over 60% of the global market.

South Korean Leaders:

• HD Hyundai Electric (High-voltage transformers)
• LS Electric (Electrical infrastructure solutions)
• LS Cable & System (Transmission cables, parent company: LS Holdings)

U.S. Companies:

• GE Vernova (Grid and energy solutions, transmission technology patents)
• Oklo, NuScale Power (SMR nuclear power for decentralized energy production)
• Vistra Energy, Constellation Energy (Traditional power distribution companies)
• Waste Management (Waste-to-energy production, recycling-driven power generation)

As AI adoption accelerates, these companies stand to benefit from rising demand for power infrastructure upgrades and energy production.

[B. Defense Industry]
  After the Cold War, global defense firms shifted focus from mass production to high-tech weaponry, leading to a decline in manufacturing capacity and infrastructure. However, the Ukraine war has reignited demand for military hardware, especially in Eastern Europe. Yet, many Western firms now struggle to scale production due to decades of underinvestment.

  In contrast, South Korea has steadily built a robust defense industry since the Korean War, emphasizing self-reliance. Decades of investment and technological advancements have positioned the country as one of the few nations capable of mass-producing advanced weaponry at scale. Nations unable to manufacture their own modern arms are now turning to South Korea, ensuring sustained demand. Furthermore, military contracts often include long-term maintenance and parts supply, creating stable revenue streams.

Key South Korean Defense Companies:

• Hanwha Aerospace (Artillery, armored vehicles, aerospace systems)
• Hyundai Rotem (Tanks, armored vehicles, railway systems)
• LIG Nex1 (Missile systems, radar, avionics)
• Hanwha Systems (Defense electronics, surveillance, command systems)

With ongoing global conflicts and increasing military budgets, South Korean defense firms are well-positioned for long-term growth.

[C. Shipbuilding, U.S. Navy MRO, and Warship Construction]
  South Korea has already established a dominant position in the global shipbuilding industry. Domestic shipyards are fully booked for the next decade, with dry docks operating at maximum capacity. The country leads in manufacturing specialized eco-friendly vessels, such as LNG-powered ships, LNG carriers, and icebreaking tankers. While Chinese shipyards take orders due to South Korea’s limited capacity, their quality issues force major international shipping companies to cancel Chinese contracts and revert to Korean manufacturers whenever slots become available.

  Meanwhile, China is aggressively expanding its naval fleet to project power in the Pacific. In response, the U.S. attempted to bolster its own shipbuilding capabilities but failed due to a lack of technology and production expertise. As a result, the U.S. amended its laws to allow greater reliance on South Korea. Two Korean shipbuilders have since acquired American shipyards, securing contracts for U.S. Navy warship construction and maintenance.

  The U.S. military has already allocated over 900 trillion KRW ($700+ billion USD) for naval fleet expansion and maintenance, repair, and overhaul (MRO) projects over the next decade.

Key South Korean Shipbuilders Leading the Industry:

• Hanwha Ocean (Warship construction, including Aegis destroyers and 3,000-ton attack submarines)
• HD Hyundai Heavy Industries (Naval shipbuilding, LNG carriers, and advanced military vessels)

With both companies holding strong track records in large-scale naval construction, they are well-positioned to dominate this sector and capitalize on the growing U.S. defense budget.

[D. Artificial Intelligence and Robotics]
  South Korea faces challenges in identifying strong investment targets in AI and robotics. While companies with technological potential exist—such as major platform firms like Kakao—there are few players generating substantial revenue like their U.S. counterparts. A lack of aggressive government funding and policy support has left South Korea lagging in AI development.

AI-driven businesses must demonstrate solid revenue streams, especially in times of economic downturns when speculative stocks decline sharply. Given this reality, the most reliable AI and robotics investment opportunities remain in the U.S., where companies are already monetizing their technologies.

Top U.S. AI & Robotics Stocks:

• Palantir Technologies (AI-driven big data analytics for government and enterprise)
• NVIDIA (AI chip leader, essential for machine learning and deep learning)
• Broadcom (Semiconductors for AI infrastructure and networking)
• Micron Technology (Memory and storage solutions crucial for AI processing)
• SentinelOne (AI-based cybersecurity, growing enterprise adoption)
• Lam Research (Semiconductor manufacturing equipment for AI chips)
• Meta Platforms (Advancing AI models for social media, AR/VR, and metaverse applications)

With AI becoming a core driver of technological advancement, these companies are positioned for sustained growth, backed by strong revenue generation and strategic industry positioning.

[E. Defensive Stocks for Economic Downturns]
  There’s growing concern that the U.S. economy will worsen in the coming months. Historically, during recessions, sectors that maintain steady revenue and consistent growth tend to outperform. The most resilient industries include finance, logistics, and energy—key defensive sectors that provide stability.

  The reason for the pessimistic outlook is clear. The U.S. is aggressively pressuring China, and China’s economy is rapidly deteriorating. With its real estate sector collapsing, once-valued assets are turning worthless, pushing the country into deep deflation. Given China’s massive influence on global markets, its economic downfall is bound to create ripple effects worldwide, leading to a temporary global slowdown.

  Investors must prepare by adding defensive stocks to their portfolios ahead of time. Companies in consumer staples, telecom, finance, and energy can hedge risks while continuing to generate profits even in tough economic conditions.

Top Defensive Stocks:
Consumer Staples:

• Coca-cola (KO), PepsiCo (PEP), Starbucks (SBUX), Walmart (WMT), Procter & Gamble (PG), Johnson & Johnson (JNJ)

Telecommunications:

• Verizon Communications (VZ), AT&T (T)

Financial Services & Payments:

• Visa (V), Mastercard (MA), American Bank (BAC)

Payroll & Data Processing:

• Automatic Data Processing (ADP)

Energy & Utilities:

• ExxonMobil (XOM)

Real Estate & Dividends:

• Realty Income (O)

Semiconductors:

• Texas Instruments (TXN)

These companies have strong balance sheets, generate reliable cash flow, and tend to perform well even during economic downturns. Allocating defensive stocks in a portfolio ensures resilience against market volatility while maintaining potential for long-term gains.

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Wishing Everyone Success in Investing

※ Disclaimer ※

This article includes personal analysis and opinions on specific stocks, but it is solely based on individual judgment. Investment decisions and their outcomes remain the investor’s sole responsibility. The content provided should be considered for reference only. This article is an original work protected by intellectual property rights. Unauthorized reproduction, use in other works, or commercial distribution without the author's consent may result in civil and criminal penalties. I do not engage in or recommend technical trading based purely on chart analysis. Not only do I lack expertise in that approach, but more importantly, I believe it is impractical for regular employees and small investors who cannot monitor stock charts during working hours. However, long-term value investing allows for steady and substantial gains, often exceeding several hundred percent returns—without disrupting professional commitments. That is the core philosophy of value investing.