JPMorgan Analysts Say US Stocks Likely To Continue Outperforming Europe in 2025

Stocks in the U.S. market are likely to continue beating their European counterparts over the next year, analysts from JPMorgan (JPM) wrote Wednesday.

However, stocks across the board are likely to slow in the first half of next year as some uncertain political factors—such as the transition to the Trump administration and the trade effects of its economic policies—are realized, the analysts wrote.

The “current phase of polarized regional market performances is likely to extend” as the impacts of the tariffs Trump has said he will implement and other new policies materialize, the analysts wrote. They also noted that the U.S. stock market has outperformed international competitors by 22% so far this year.

Small Caps Likely To Benefit in 2025

Within the U.S., the analysts said they expect the business “uncertainty” experienced by smaller-market capitalization stocks will ease over the next year. The analysts said they expect small-cap stocks will benefit from Trump’s expected deregulation and the increased merger and acquisition (M&A) activity that could follow.

The possibility that international stocks outpace U.S. stocks is “clearly there” as U.S. markets are already trading at a high price-to-earnings (P/E) multiple, but the analysts said “one first needs to get more clarity on trade and on geopolitics fronts” before predicting that shift.

Separately, another group of JPMorgan analysts outlined in a different note on Wednesday a 2025 target of 6500 for the S&P 500, joining similar recent projections from Goldman Sachs (GS) and Morgan Stanley (MS). The JPMorgan analysts said the market could face more volatility with the policy changes coming next year, but said they believe “opportunities are likely to outweigh risks” as deregulation and more artificial intelligence (AI)-related capital spending could boost the market.