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Investment Management

Fourth Quarter 2025 Insight

November 7, 2025

John Allen

John Allen
Marc Castellani

Marc Castellani
Camila Kremer

Camila Kremer

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Q4 2025 Aspiriant Investing Insight Highlights

Investment Strategy & Research (IS&R)

Explore key insights from our Investment Strategy & Research (IS&R) team’s fourth-quarter 2025 market outlook. This brief highlights the powerful global forces shaping markets—from AI-driven innovation and evolving monetary policy to shifting trade dynamics and geopolitical uncertainty—and what they mean for investors today.

If you prefer a deeper dive, read the full Insight report here.

Highlights

  • The U.S. Economy Remains Resilient: As we head into the end of 2025, the economy continues to grow. Job gains and spending have cooled somewhat, but overall, the economy has remained resilient.
  • AI Dominance: Artificial intelligence continues to drive market performance, lifting earnings, fueling investment in data centers and shaping expectations for growth and inflation.
  • Mounting Uncertainties: At the same time, several dynamics may pressure markets, including the possibility of a prolonged government shutdown, a softer U.S. dollar, concentration of returns in a few large tech names and heightened international tensions.
  • Portfolio Implications: With powerful global forces reshaping the world order—forces that are likely to remain unresolved for some time—it’s critical to maintain a disciplined investment approach, staying well-diversified to balance potential risks and opportunities that lie ahead.

Macro Environment at a Glance

Decomposing the S&P 500: The Magnificent 7 have come to dominate the market across multiple metrics. In 2015, they accounted for 9% of the earnings and 11% of the market capitalization of the S&P 500. Today, they represent roughly 22% of earnings and 35% of market capitalization. That means seven companies out of 500—or just 1.4% by count—constitute roughly a quarter of total earnings and one-third of the U.S. large-cap equity market’s value. Figure 1 illustrates how the Mag 7’s share of S&P 500 earnings and market capitalization has expanded over the past decade.

Market concentration of this magnitude benefits investors only as long as the Mag 7 continue to outperform. To sustain high valuations and expectations for AI-related growth, several have invested hundreds of billions in capital expenditures to acquire advanced graphics processing units (GPUs) and build data centers. At these levels, there is little margin for error if adoption or economics fall short of expectations.

S&P 500 Earnings & Market Cap Decomposed into the Mag 7 & Other 493

What’s Fueling AI

Propelling development forward and reinforcing the AI capital-expenditure (capex) cycle the industry created a web of interdependencies. Nvidia invested in leading AI model developers—xAI, Mistral and OpenAI—while those companies use those same proceeds to buy Nvidia chips. Similar dynamics exist linking OpenAI to start-ups and hyperscalers such as Microsoft and Oracle. This tangled web of relationships may accelerate AI growth in the near term, but it could also make the AI complex more fragile and politically exposed as conflicts of interest become more apparent and disruptive.

One potential chokepoint for AI development is access to electricity. An AI search requires about 10 times more energy than a standard Google search. As data centers sprout up to support the increasing use of AI, demand for power is expected to accelerate significantly. As shown in Figure 2, global data-center electricity consumption is projected to rise sharply over the next decade.

Within five years, power demand from data centers is forecast to double and in ten years, more than triple. In the U.S. alone, data centers are expected to account for 10 to 12% of electricity consumption by 2030.

Global Power Demand from AI Data Centers

Rare Earth Elements (REEs)

Rare earth elements (REEs) are needed for magnets vital to several industries, including automakers, aerospace, semiconductors and national defense. China’s global supply is estimated to represent roughly 70% of REE mining and 85–90% of refining and processing, making most developed countries heavily reliant on its exports. Stocks of REE miners and refiners in the U.S., Canada and Australia have surged as China flexed its negotiating position by announcing plans to restrict exports and new deals are emerging.

Final Thoughts & Portfolio Considerations

  • The U.S. economy remains relatively strong, with growth around 2% annualized in the third quarter. At the same time, youth unemployment reached a 10-year high and core inflation remains above the Fed target.
  • Uncertainties persist around AI, trade, U.S. fiscal sustainability and geopolitical tensions. While market volatility can feel uneasy, investors must exercise discipline, agility and wherewithal to thoughtfully reallocate the portfolio as new opportunities emerge.
  • We remain optimistic about the opportunities ahead and believe the best approach is to maintain a diversified portfolio, including a mix of U.S. and international stocks and bonds, gold and other hard assets, and private markets where appropriate.
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John Allen
John Allen

Chief Investment Officer, Partner

John joined Aspiriant in 2014 as Chief Investment Officer. As CIO, John is primarily responsible for leading the firm’s overall Investment Strategy & Research Group, broadly consisting of 12 professionals. The group is responsible for asset allocation, portfolio construction, manager selection and risk management. John also chairs the firm’s Investment Committee and serves on a number of other committees. He has over 20 years of experience in investment management, investment banking, corporate finance advisory and business strategy consulting.

Prior to joining the firm, John was a senior member of the client service team at Grantham, Mayo, Van Otterloo (GMO), which manages approximately $80 billion across a wide-range of public equities, fixed income, hedge funds and asset allocation funds. In that role, John had primary responsibility for 80 clients and $6.5 billion in assets under management.

Prior to joining GMO, John was the Head of Investments at a large family office in Los Angeles. There, John had responsibility for managing the firm’s overall investment portfolio as well as its direct investments. Previously, John established his career working in the investment banking department at Donaldson, Lufkin & Jenrette and in the business consulting practice at Stern Stewart & Co. Throughout his career, John has served on the boards of directors of three private companies.

John earned a Bachelor of Science degree with high distinction from the Economics Department at the University of Virginia. He holds the Chartered Financial Analyst® (CFA®) designation and the Chartered Alternative Investment Analyst (CAIA) designation. He is also a member of the CFA Institute and CAIA Association.

John lives in Los Angeles with his family.

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Marc Castellani
Marc Castellani

Managing Director in Private Investments, Chair of the Board of Directors, Partner

Marc joined Aspiriant in February of 2015. He has over 25 years of experience in the financial services industry. Marc oversees the firm’s private investment offering (private equity, venture capital, hedge funds and private real estate), and actively works with his colleagues on asset allocation, investment strategy and manager selection. Marc is a member of Aspiriant’s Investment and Client Service Committees.

Prior to joining the firm, Marc worked at the J.P. Morgan Private Bank in Los Angeles in a senior client management role and worked with families and high net worth individuals on portfolio management, tax planning, liability management and wealth transfer strategies. Before moving to Los Angeles in 2009, Marc worked for several years in New York City in the Mergers and Acquisitions departments of J.P. Morgan and Banc of America Securities. In that capacity, Marc advised large multinational clients and privately held, family-owned businesses on a range of strategic alternatives including sales, mergers, acquisitions, divestitures, spin-offs and growth equity financings.

Marc earned his undergraduate degree at Cornell University and his graduate degree in finance at the University of Rochester.

Marc lives in Manhattan Beach with his wife and children.

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Camila Kremer
Camila Kremer

Senior Research Analyst in Investment Strategy & Research, Partner

Camila joined Aspiriant in 2019 as a Research Analyst on the Investment Strategy & Research team. She has over 11 years of experience within the investment management industry working with both private and institutional clients.

Prior to joining the firm, Camila worked at Kairos Investment Management Company focusing on private markets and impact investments. She began her career at a private research firm in Boston specializing in alternative investments.

Camila earned her bachelor’s degree in Economics and International Relations from Lehigh University. She is a Chartered Alternative Investment Analyst and a Chartered Financial Analyst® charter holder.

She is passionate about economic development and empowerment through education. Camila is originally from Brazil and currently lives in Santa Monica, Calif.

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Aspiriant is an investment adviser registered with the Securities and Exchange Commission (SEC), which does not suggest a certain level of skill and training. Additional information regarding Aspiriant and its advisory practices can be obtained via the following link: aspiriant.com.

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All opinions, figures, charts/graphs, estimates and data included in this document are as on date and are subject to change without notice. The statements contained herein may include statements of future expectations, for general market performance or economic conditions, and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. Forecasts, projections and other forward-looking statements are based upon assumptions, current beliefs and expectations. Forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties, including but not limited to: economic, business, market and geopolitical conditions; U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy. Any forward-looking information should not be regarded as a representation by Aspiriant or any other person that estimates or expectations contemplated will be achieved, as the future is not predictable.

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