S&P 500, Nasdaq could rise 15-20% over the next 12 months: Mark Matthews

Artificial intelligence (AI)-related stocks have more room to grow, said Mark Matthews, managing director and head of research for Asia at Julius Baer at a lunch organised by Business Standard on the sideline of Business Standard BFSI Insight Summit 2025.

 

He described the current market sentiment related to AI stocks as “crazy,” amid the hype surrounding tech leaders such as Nvidia’s Jensen Huang and OpenAI’s Sam Altman.

 

“There are definitely AI rockstars. Jensen Huang is number one, and Sam Altman is another. Others like Mark Zuckerberg or Jeff Bezos now look like legacy figures,” he said. “Historically, every big technological transition — whether it was oil or finance — had towering figures like Rockefeller or JP Morgan. So this isn’t new.”

 

 

While acknowledging that the euphoria feels “frothy,” Matthews does not believe the AI phase signals an imminent correction. “When you combine these flamboyant personalities with extreme bullishness, it does feel overheated. That said, I think the S&P 500 and Nasdaq could still rise 15–20 per cent over the next 12 months.”

 

Countering this view, Shankar Sharma, founder GQuant FinXRay noted that the S&P 500 and Nasdaq have done well only in dollar terms. “In euro terms, they’re lagging badly this year,” he said.

 

Focus on China

 

Even as China’s economy has grown rapidly over the years, its muted stock market returns emerged as a key point of discussion. Since 2020, China’s CSI 300 index has gained nearly 13 per cent, even as the country’s economy has expanded multifold, Matthews said.

 

Matthews also showed a slide depicting Tencent’s headquarters with a statue reading 'Join our party, start your business', a symbol of the state’s deep control over private enterprise.

 

With the state’s growing presence in India as well, Matthews cautioned that the single biggest risk for the country lies in rising inequality -- between rich and poor, and between old and young.

 

“When young people can’t find good jobs, societies tend to adopt more socialist policies, which usually don’t yield strong stock market returns,” he said. “China somehow built a prosperous economy despite poor market returns by distributing wealth. The danger is that other nations might try to copy China’s state-heavy model without understanding how it really worked.”

 

However, Shankar Sharma offered a contrasting perspective. He argued that China had deliberately suppressed its stock market to channel talent into areas of real innovation, research and development (R&D), manufacturing, and engineering, rather than into gaming or delivery apps.

 

“This system is hard to replicate elsewhere,” Sharma said. “India, for instance, is already too financialised — too many engineers are building apps for food delivery instead of hard tech. It’s too late to reverse that model now.”

 

Nationalism and deglobalisation

 

Asked whether the rise of nationalism in major economies such as the US and China was hurting global growth, Matthews said the impact so far has been less severe than expected.

 

"Superficially, it looks like it should be very bad, because we were all taught that globalization is good, that it creates activity and encourages the free flow of people and capital. A reversal should be bad, but somehow that’s not showing up in the numbers," he said. He added that the modern economy’s shift toward services may be cushioning the blow.