By Billy Leung
July 23, 2025 — 5.01am
For investors, the first half of 2025 rewarded smart positioning in selective asset markets. Money poured into artificial intelligence (AI) stocks, defence stocks, and gold, which all outperformed, while the expected rotation into small caps companies didn’t happen, as elevated funding costs and destabilising US trade policies weighed on smaller businesses.
Looking ahead to the second half of the year, the game plan is the same, with some adjustments to gain exposure to winning asset classes and add portfolio resilience.
Nvidia has become the first company in history to top $U4 trillion in valuation.Credit: Bloomberg
Our approach continues to centre on three core exposures: growth via AI, resilience via gold and real assets, and valuation discipline via global companies with strong earnings and reasonable pricing.
AI adoption continues to broaden across sectors, with enterprise software, infrastructure, and semiconductor companies such as Nvidia and Broadcom driving earnings resilience and pricing power.
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Gold has reasserted its role as a reliable macro hedge amid elevated real yields, inflation volatility, and rising global uncertainty, gaining over 26 per cent year to date in USD terms to July 7. Silver has also gained a similar amount at 23 per cent, and platinum by even more, up 52 per cent this year, as investors seek the security of precious metals.
The second half of 2025 demands even smarter positioning as macroeconomic risk hasn’t eased. Still, we think it is wise to repeat our forecasts for investors, which have largely been on the money.
Put simply: hold AI assets. Artificial intelligence remains a key structural theme, and AI leaders will likely display strong earnings momentum across software, compute, infrastructure, and power.
Companies that potentially stand to benefit from the further development and utilisation of artificial intelligence technology in their products and services, as well as in companies that provide hardware facilitating the use of AI.
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We continue to see relative strength in the US share market, which continues to attract a huge amount of retail investors’ capital. Importantly, we expect the US share market to convincingly outperform the Australian share market over 2025.
With more equity records expected, ongoing investment in the largest technology companies listed in US stock markets will remain key, including companies like Nvidia, Alphabet, Apple, Amazon and Microsoft, as well as a range of digital innovators enabling new technologies.
The strategy for investors hasn’t changed, just the execution.
Defence will likely remain a top-performing asset class and an important addition for investors’ portfolios. As defence spending increases globally and the focus shifts to advanced digital technologies – such as drones – away from traditional military hardware like jets and tanks, defence is increasingly being seen as an essential and stable investment opportunity as wars rage around the world.
To add resilience, global companies with strong earnings growth, solid financials and reasonable valuations provide balanced exposure to quality and growth in this uncertain environment.
Turning to real assets such as gold and silver, which remain a proven hedge amid elevated real yields and political risk. Defensive income exposures are also gaining importance as share market volatility continues and interest rates on cash investments fall.
Gold remains a safe haven for investors.Credit: Jim Rice
Other forms of income will be attractive, especially high-quality corporate bonds. Exposure to Australian bank debt, for example, is important as hybrids mature and term deposit rates fall to multi-year lows.
We also think wise investors should explore opportunities linked to infrastructure and energy-linked commodities. Companies linked to nuclear energy are benefiting from strong global policy but remain under-represented in portfolios.
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Copper is also essential for the clean energy transition and copper miners are well-positioned to capture long-term capital investment across electrification, power infrastructure, and AI-related infrastructure build-out. Uranium, too, stands out for its strong performance on global markets as demand for clean energy rises exponentially.
Companies involved in the supply of clean energy and associated infrastructure, along with those involved in refining copper and uranium used to power the digital age, are also important to power portfolios.
So, in summary, the strategy for investors hasn’t changed, just the execution. The second half of 2025 and 2026 is about holding on where momentum is real, rotating where leadership is shifting, and staying aligned with where the wealth signals are the strongest.
Billy Leung is a senior investment strategist at ETF provider Global X.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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