The year 2025 brought with it hope and uncertainty. In a normal scenario, it could have been a year of recovery. However, it became a year of correction amid geopolitical and trade tensions. However, there is a silver lining to this. The tech stocks decline during the 2018 trade war led to a sharp recovery in 2019. Sectors going down in 2025 amid tariff uncertainty could see a rebound in 2026, creating a buy-the-dip opportunity now.
Prediction #1: A fall before the big rise in automotive stocks
Automotive stocks have been declining as China’s electric vehicles (EV) beat other companies in cost and performance. European Union imposed a ban on China’s EV imports. Moreover, EVs continued to be costlier than internal combustible engines (ICE) vehicles. Add to it the high interest rates of North America that made cars unaffordable. And now, U.S. president Donald Trump scrapped the EV subsidies in January 2025 and is imposing tariffs on various imports, further putting downward pressure on EVs.
With all macro factors playing against auto stocks, Magna International (TSX:MG) stock seems to have bottomed out. The stock has declined 58% since Joe Biden’s EV mandate in early 2021. A cyclical stock like Magna could see a significant rise towards the end of 2025 and early 2026 as interest rates fall. Trump has promised to make cars affordable through domestic production. Magna has automotive assembly facilities in the United States.
It is looking to use these import bans and tariffs to its advantage and assemble cars for other automakers. Magna Steyr is in talks with Chinese automakers Xpeng and GAC Motor to assemble EVs at its Austria plant. Since Chinese EV imports are banned, semi-knocked-down kits will be imported from China and assembled at Magna’s facilities. This will be a test with small numbers. But if it succeeds, Magna could use it in other markets, too.
Magna is also integrating the NVIDIA DRIVE AGX platform, bringing autonomous driving (AD) solutions. When the AD revolution kicks in, Magna stock could soar alongside Nvidia.
Magna has a strong balance sheet to withstand the multi-year downturn and still give dividends. When automotive demand flourishes, Magna stock could surge triple-digit in a few months, compensating for the last four-year decline.
Prediction #2: Advanced Micro Devices to ride the next AI wave
It may be one of my zaniest predictions, but Advanced Micro Devices (NASDAQ:AMD) could be on track to ride the next artificial intelligence (AI) wave, which will focus more on cost-efficient hardware for both data centres and embedded devices. Deepseek AI has established that not all AI applications need the supercomputing power of Nvidia’s expensive graphics processing units (GPU). The AI infrastructure could be a mixed blend of cost-efficient AI chips and high-performance AI chips.
Since most companies have installed Nvidia’s high-performance AI chips to train large language models, the next phase could see a rise in demand for AMD’s aptly powerful and cost-efficient AI chips. When this phase comes, AMD stock could jump triple-digit in a few months.
Prediction #3: Non-prime lending stocks will revive
It may be hard to believe non-prime lenders outperforming the market in a weak economic environment, but it could come true for goeasy (TSX:GSY). The first reason to be bullish is the implementation of the maximum allowable rate of interest of 35%. This will prevent goeasy from giving loans to very high-risk customers. The second reason is falling interest rates, which will make securitization cheaper for goeasy. And lastly, goeasy’s selective presence and cautious expansion in Canada.
The non-prime lender is lending with caution, with most of its loans to repeat borrowers. The business of goeasy is to deal with credit risk, which makes it efficient in risk handling. Call it zany, but the stock has thrived in difficult situations and generated strong returns during recovery.
Investor takeaway
The first half of 2025 will likely see a correction, with some recovery expected in the last quarter of the year. Patience and staying invested in the market could be rewarding in the long term.
