Artificial intelligence (AI) is no longer just a futuristic concept – it’s a part of our daily lives, from the way we shop to how we work and even how we entertain ourselves.
As we head into 2025, the opportunities and challenges in AI are growing rapidly, and investors have good reason to keep a close eye on this space.
Here we explore what’s next for AI, why it matters, and how it could impact your investments.
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AI expands beyond big tech
For years, big names like Microsoft, Alphabet, and Amazon have dominated AI development. They’ve invested billions into AI systems for cloud computing and language model development.
But in 2025, we see AI spreading beyond these giants.
London Stock Exchange Group (LSEG) is a great example, a global financial markets infrastructure and data provider, which is integrating AI into its core data and analytics offerings. By leveraging AI, LSEG has an opportunity to evolve its data products into something that offers even more value to its customers.
AI has the ability to create value in some of the biggest markets in the world, but it's worth paying attention to the smaller players, too.
AI in healthcare
Healthcare is one of the industries where we see AI making some of the biggest leaps in 2025. From diagnosing diseases to managing patient care, AI can transform how healthcare is delivered.
The applications are broad, like using AI to predict kidney injuries 48 hours before they occur, giving doctors critical time to intervene.
Similarly, drug discovery companies are using AI to identify treatments faster than ever before.
These breakthroughs not only save lives but also cut costs, making healthcare companies with strong AI strategies a viable avenue to gain exposure to this evolving technology.
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AI and jobs – what are the opportunities and challenges?
One of the biggest questions about AI is how it will affect jobs.
In 2025, we’re likely to see more AI systems automating routine tasks, from data entry to customer support. While this might lead to job losses in some areas, it will also create new jobs in AI development, maintenance, and regulation.
For example, Klarna, the buy-now-pay-later company, has reduced its reliance on customer support agents by implementing AI chatbots to handle basic queries. This move has cut costs significantly while improving customer response times.
We’re always on the lookout for businesses that can balance automation with workforce adaptation and productivity gains.
The rise of AI agents
We think AI agents could be the major trend in 2025, with the potential to revolutionize how businesses and organizations operate.
AI agents can work alongside humans to analyse data, make decisions, and take actions autonomously. For instance, instead of merely answering questions, customer-facing AI agents can handle more complex tasks, like booking appointments and processing orders.
One of the first movers at scale is Salesforce with its Agentforce product that allows businesses to automate and enhance various operations.
Some companies are already using their AI agents to provide autonomous support through apps and websites, answering customer questions, and handling scheduling and payment requests.
These use cases highlight the growing versatility of AI agents across sectors. For investors, businesses adopting or innovating with AI agents present exciting opportunities.
The AI arms race – competition is heating up
AI development is not just a business trend, it’s also a geopolitical issue. Areas like the US, China, and the EU are investing heavily in AI to stay ahead in the global race for technological dominance.
For example, NVIDIA, a leader in AI chips, has become a crucial player in this arms race. Its graphic procession units (GPUs) power everything from AI research to autonomous vehicles. As global demand for these chips has grown NVIDIA’s been able innovate, while navigating geopolitical tensions. We think this makes it a key company to watch.
Investors should also monitor how geopolitical shifts affect other companies in the AI supply chain.
Is regulation the wild card?
AI regulation is still a work in progress, and 2025 will be a critical year for shaping how governments around the world oversee this technology. Regulators are focusing on ethical issues like data privacy, bias in AI algorithms, and the potential misuse of AI.
The European Union’s AI Act, expected to come into force in 2025, aims to set the gold standard for AI regulation. It’s a reminder that companies will need to invest in compliance to thrive in this environment.
The bottom line for AI
AI is one of the most exciting and fast-moving sectors in the market, and 2025 is shaping up to be a pivotal year. From transforming industries like healthcare and transportation to reshaping the global economy, AI offers enormous opportunities for investors.
That said, it’s important to approach AI investments with a clear strategy. As with most new innovations, it’s unlikely to be a straight road ahead and some early use cases might not live up to their hype.
It’s important to look for companies with real-world applications and a proven track record, and keep an eye on emerging trends like AI in sustainability and regulation.
We’ve just released our expert share research teams’ top investment picks for 2025 and beyond.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.