AI and technology stock outlook: 2H 2025

AI and technology stocks continued to drive stock market returns in the first half of 2025, even after early-year trepidation. Where does the sector go in the second half? We see an expanding opportunity set in artificial intelligence (AI) and tech broadly remaining a powerful engine of long-term value creation.

A fractured first half

The first half of 2025 presented a tale of two quarters for technology stocks. Q1 was embroiled with AI skepticism, trade tensions and policy concerns. Q2 brought stellar earnings, robust capex and roaring AI conviction that pushed technology and AI stocks to all-time highs.¹ This is not unusual for technology. Over the past decade, periods of underperformance have been followed by a quarter of double-digit rebound roughly 80% of the time.² The broader market followed the splintered trend to end at new highs, as we outline in our Q3 Equity Market Outlook.

Looking to the second half, we see AI continuing to drive structural change across industries, accelerating demand in semiconductors, robotics, cybersecurity and next-generation digital platforms.

Expanding opportunity in 2H and beyond

Since the launch of ChatGPT in late 2022, AI has silently penetrated our lives, fundamentally changing the world and how human beings behave. Today we find ourselves in a rapidly developing stage of AI adoption, not only through an investment lens but as a society and as consumers of AI.

In our midyear technology outlook, we delve into five key aspects of the AI revolution with insights on the investment implications and opportunities:

1. The robots are coming. Humanoid robotics may be the most transformative frontier in physical AI, with the potential to reshape global labor markets and unlock trillions in value across manufacturing, logistics and service industries. We outline four key challenges from a technology perspective.
2. GPUs are ramping up. The second half of 2025 is poised to be dominated by AI-driven semiconductor demand, with hyperscalers, sovereign funds and enterprise clients ramping up investments in compute, memory and networking layers.
3. Quantum. While quantum computing is advancing quickly, investment to date is still relatively low, especially compared to expenditures on AI. Progress in hardware, error correction and system design is steadily pushing the field forward.
4. Protection in the new landscape. Cybersecurity efforts are set to expand in late 2025 and beyond, driven by increasingly sophisticated threats. As cyber threats grow in sophistication and scale, cybersecurity investments will become increasingly critical.
5. A path less traveled: internet. Even in 2025, the lion’s share of income for top companies comes from advertising, but the strategic importance of diversification is high. AI has a key role to play here.