Pictet’s ‘Megatrending 2025’ report highlights how megatrends, the powerful socio-economic, environmental and technological forces that are shaping our world, act as catalysts for long term growth and give rise to new business opportunities.
As an introduction, Steve Freedman, Sustainability and Research Manager, Thematic Equities at Pictet Asset Management, unpacks the driving forces and current state of play of the seven most significant megatrends for 2025 and beyond.
Steve comments: “Megatrends are a crucial source of long-term revenue and earnings growth. They have a bearing on investment returns and that is why we use them as the basis for each of our thematic equity portfolios.
- Tech beyond AI
AI is not the only tech trend worth watching. Advancements in robotics and automation are boosting efficiency and safety. From autonomous vehicles to robotic process automation, these technologies are reshaping sectors, including manufacturing, healthcare and logistics. One pioneering start-up truck maker providing Autonomous Transportation as a Service (ATaaS) is due to launch driverless freight services in Texas in 2025, while Tesla plans to deploy 1,000 humanoid robots in its factories by the end of the year. Meanwhile, AI will also continue to evolve, with promising areas for growth in biotech – such as drug development, data and image analysis and drug repurposing – and in consumer services and the workplace, where technology can enhance productivity.
- 3D Chips
Smartphones, computers, cars and even military equipment all rely on semiconductors. Companies worldwide are scrambling to make these chips smaller, while increasing computing power and energy efficiency. As the stacking of transistors on silicon wafers reaches physical limits, the industry’s shift from 2D to 3D architecture will continue. Chip designers are now thinking in three dimensions, stacking tiny squares – or “chiplets” – that would normally form one chip on top of a base silicone layer using hybrid bonding. Samsung Electronics is one of the companies planning to introduce a new 3D chip in 2025.
- CDMOs – New kids on the bloc in pharma
The growing complexity of new medicines and treatments is spurring demand for a group of companies called CDMOs (contract development manufacturing organisations). These specialised service providers focus on specific areas of drug development and manufacturing. By outsourcing some of these activities to CDMOs, pharma companies can share some of the risks and accelerate the delivery of new therapies. CDMOs add value by streamlining the research and manufacturing process. They have a growing role to play in modern medicine, including in the development of personalised treatments and cell therapies.
- Trees reimagined
Wood is now a popular packaging material, driven by green consumerism and the growth of e-commerce. It is also becoming a significant component in construction projects thanks to new technological advances such as cross-laminated timber and new environmental building regulations. But it is also a key ingredient in new materials, such as wood-based PET used in clear Coca-Cola bottles, and biodiesel that can be used to dilute or substitute traditional diesel for lorries and cars. Timberlands are increasingly being used for renewable energy infrastructure, including wind turbine towers and structures for mounting solar panels. Wood can also play a more direct role in carbon capture and storage, either through credits or bioenergy carbon capture and storage (BECCS).
- Solving the gridlock
A greener planet needs more electricity – and from clean sources. To achieve that, we need a smarter power grid. The International Energy Agency (IEA) estimates that to meet net zero emission goals, we need to build or modernise 25 million kilometres of electricity grids in the next five years. Firstly, the increased use of renewables requires investing in network interconnections to transport power from remote solar- and wind-rich areas to demand centres and connect renewable energy production to the grid. Secondly, sector electrification such as the rise of electric vehicles and heat pumps will increase electricity demand, requiring grid reinforcement and modernisation. Thirdly, grids will need to be able to withstand extreme weather events to avoid power outages.
- Fight against floods
Floods cause USD40 billion in damage each year. Climate change, broader weather events and the urbanisation of flood-prone areas mean it’s essential to build structures and develop landscapes that are resilient to natural disasters. For instance, in 2024, Europe was hit by some of its worst flooding in over two decades. Flood resilience is a key pillar of climate adaptation, including constructing flood defences and managing flood water. Cities are focusing on creating more resilient infrastructure and using technology to better plan defences – such as using digital twins to model potential flood impacts. New York is one of the cities enforcing new building regulations to ensure flood resilience, with stringent standards for critical infrastructure such as hospitals and power plants and has initiated a project to fortify its defences against coastal flooding.
- Smart nutrition
The USD45 billion sports nutrition market is expected to expand at a compound annual growth rate of 7.5 per cent through to 2030, driven by demand for supplements that can enhance performance, post-exercise recovery and reduce the risk of injury. Increased focus on health is also boosting demand for functional products such as food fortified with key vitamins and probiotics. Additionally, the growing use of GLP-1 weight loss drugs has created a market for related products which can help preserve lean muscle mass and ensure adequate micronutrient intake while consuming fewer calories. Companies like Nestlé and Herbalife have already launched GLP-1 companion products, and we expect to see more product ranges catering to GLP-1 users on the market in 2025.