Major technology stocks are positioned for a strong year-end rally as artificial intelligence initiatives accelerate and regulatory pressures ease under President-elect Donal Trump, marking a potential end to Federal Trade Commission Chair Lina Khan's aggressive oversight of Big Tech companies according to Wedbush Securities Managing Director Dan Ives.

What Happened: "We expect tech stocks to be strong with a Santa rally as the Street further digests a less regulatory spider web under Trump with Khan/FTC days in the rearview mirror, stronger AI initiatives on the way, and a goldilocks foundation for Big Tech and Tesla into 2025," Ives wrote on X.

The forecast comes amid projections of unprecedented AI-related spending reaching $1 trillion by the end of 2025.

JPMorgan echoes this optimistic outlook, projecting the United States to lead global growth in 2025. The financial giant highlights the Magnificent 7 tech companies – Amazon.com Inc. (NASDAQ:AMZN), Microsoft Corp. (NASDAQ:MSFT), Meta Platforms Inc. (NASDAQ:META), NVIDIA Corp. (NASDAQ:NVDA), Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), Tesla Inc. (NASDAQ:TSLA), and Apple Inc. (NASDAQ:AAPL) – planning combined investments exceeding $500 billion in capital expenditure and R&D.

Why It Matters: However, Morgan Stanley's chief U.S. equity strategist Mike Wilson urges caution, describing the S&P 500 as "extremely expensive" at 23 times forward earnings. The firm projects a 5% contraction in valuation multiples for 2025, despite anticipated earnings growth.

The technology sector's trajectory may also be influenced by potential regulatory shifts in cryptocurrency markets. Reports suggest the incoming Trump administration plans to transfer oversight of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) spot markets to the Commodity Futures Trading Commission, potentially reshaping the $2.24 trillion digital asset landscape.