tonies is growing faster than expected: In the third quarter of 2026, the manufacturer of the Toniebox and its accompanying audio figures increased its revenue by 27.6% to €179.9 million, significantly exceeding the consensus estimate of €171.5 million. The growth is driven by North America, which posted a 42.1% increase and is now the company’s largest market. After nine months, revenue stands at €422.9 million, representing a 33.1% increase. Management confirmed but did not raise its full-year forecast of more than €760 million in revenue with an adjusted EBITDA margin of 9 to 11%. The stock hit a new record high of €14.60 on October 21, 2026, and closed at €13.30 on Xetra on November 12 following the earnings release. From a technical analysis perspective, tonies is in a clear medium-term uptrend, with a procyclical buy signal emerging above €14.60. Analysts have an average price target of €18.31.

Key Points

• Q3 2026: Revenue €179.9 million (+27.6%), consensus €171.5 million
• North America in Q3: +42.1% to €72.7 million; figures: +35.4% to €131.0 million
• Nine months: Revenue €422.9 million (+33.1%)
• 2026 forecast confirmed: more than €760 million in revenue, adjusted EBITDA margin of 9 to 11%
• 2030 target: more than €1.4 billion in revenue, adjusted EBITDA margin of 16 to 18%
• Record high of €14.60 on Oct. 21, 2026; Xetra closing price on Nov. 12, 2026: €13.30
• Analysts: Average price target €18.31, range €17.25 to €20.00
• Chart levels: Buy signal above €14.60, support at €11.47, critical level below €9.80

What are the current key metrics for the tonies stock?

With a market capitalization of approximately €1.69 billion (Xetra closing price as of Nov. 12, 2026), the tonies stock is no longer a bargain: Based on analyst estimates, the P/E ratio for 2026 is around 37 and for 2027 around 23.

Measured against expected revenue of more than €760 million, investors are paying well over double the annual revenue. tonies does not pay a dividend; the company is investing its money in growth and new markets.

• Share price (Xetra: TNIE): €13.30 (closing price on November 12, 2026)
• All-time high: €14.60 (October 21, 2026)
• 52-week low: approximately €7.90 (November 2025)
• Year-to-date performance: approximately +27% (November 12, 2026)
• Market capitalization: approx. €1.69 billion (126.85 million shares) (November 12, 2026)
• Revenue for Q3 2026: €179.9 million (+27.6%) (November 12, 2026)
• Revenue for the first 9 months of 2026: €422.9 million (+33.1%) (November 12, 2026)
• Revenue in North America for the first 9 months of 2026: €177.0 million (+45.3%) (November 12, 2026)
• Revenue for 2025: €630.3 million (+31.2%) (April 14, 2026)
• Adjusted EBITDA for 2025: €54.1 million (margin 8.6%) (April 14, 2026)
• Adjusted EBITDA for H1 2026: €1.8 million (margin 0.7%) (August 20, 2026)
• 2026 Forecast: Revenue > €760 million, adjusted EBITDA margin 9–11% (confirmed Nov. 12, 2026)
• P/E ratio 2026e / 2027e: approx. 37 / approx. 23 (analyst consensus)
• Fair value at end of 2027 (revenue): approximately €14.22 (average P/S ratio 1.9) (Aktienfinder, Nov. 13, 2026)
• Average analyst price target: €18.31 (+38%), range €17.25–€20.00 (November 13, 2026)
• Dividend: none (—)
• Next event: Full-Year 2026 Trading Update on February 1, 2027 (tonies IR)
• Index: SDAX (since Dec. 22, 2025) (—)
• WKN / ISIN / Ticker: A3CM2W / LU2333563281 / TNIE (—)

What news is currently driving the tonies stock?

The tonies stock is currently being driven primarily by its strong third quarter—and the question of why the stock fell on earnings day despite a 27.6% increase in revenue.

On November 12, the stock initially opened higher but then turned lower, closing 2.9% lower at €13.30 on Xetra. One reason may be that tonies merely confirmed its full-year forecast rather than raising it. According to the earnings presentation, the earlier launch of key new products shifted revenue from the fourth to the third quarter—after nine months, 56% of the annual forecast has been achieved, leaving 44% to be delivered in the holiday quarter. On the same day, tonies initiated a voluntary recall of the “Helene Fischer – Die schönsten Kinderlieder” figurine due to small parts that could come loose. My analysis of adidas Aktie.

• Nov. 12, 2026 – Q3 well above expectations: Revenue of €179.9 million (+27.6%) instead of the expected €171.5 million; North America +42.1%; figures +35.4%. 2026 forecast confirmed. Stock closes 2.9% lower at €13.30. (Bullish)
• Nov. 12, 2026 – Recall of a Helene Fischer figurine: Voluntary recall due to small parts that can come loose; customers will receive a replacement or refund. Financial impact not quantified. (Neutral)
• October 21, 2026 – New record high at €14.60: Following target price increases by NuWays (€18.50) and Oddo BHF (€17.50), the stock rises above its previous all-time high from December 2021. (Bullish)
• August 20, 2026 – First Half: Strong Growth, Thin Margin: H1 revenue €242.9 million (+38%), adjusted EBITDA only €1.8 million (margin 0.7%), net loss −€27.3 million. Berenberg raises price target to €20. (Neutral)
• June 18, 2026 – Capital Markets Day: 2030 target doubled: More than €1.4 billion in revenue and a 16–18% adjusted EBITDA margin by 2030; at least two new markets per year starting in 2027. (Bullish)
• December 22, 2025 – Inclusion in the SDAX: tonies is added to Deutsche Börse’s small-cap index. (Bullish)

What does tonies’ management say about the quarterly results?

CEO Tobias Wann says tonies is “fully on track, both strategically and operationally” after nine months, while CFO Hansjörg Müller emphasizes that the international growth strategy continues to bear fruit.

tonies did not publish earnings figures in its quarterly report, but the financial position has not changed significantly since the end of June.

What went well: All three regions posted double-digit growth. North America grew by 42.1% to €72.7 million in the third quarter, the Rest of the World by 36.6% to €38.9 million, and the DACH region by 11.4% to €68.3 million. High-margin figures boosted revenue by 35.4% to €131.0 million, while Tonieboxes increased revenue by 12.6% to €43.9 million. The share of international revenue rose to 63% after nine months.

The catch: Despite the strong quarter, the forecast was not raised. Management itself acknowledges in the presentation that the early launch of new products shifted revenue from the fourth quarter to the third, and that the final quarter will face a strong prior-year comparison with the launch of the Toniebox 2. For the crucial Christmas quarter—in which tonies generated roughly half of its annual revenue in 2025—a growth rate of about 8% would suffice on paper. The quarterly report makes no mention of profitability or cash flow. In the first half of the year, the adjusted EBITDA margin was only 0.7%, and cash flow was significantly negative due to inventory buildup ahead of the holiday season.

Outlook: For 2026, tonies expects revenue of more than €760 million, representing currency-adjusted growth of more than 20%; North America is projected to grow by more than 30%. The adjusted EBITDA margin is expected to reach 9 to 11%. By 2030, management aims to double revenue to more than €1.4 billion and enter at least two new countries each year starting in 2027.

What does tonies do, and how does the company make money?

tonies sells the Toniebox, a durable, screen-free audio cube for children, and—most importantly—the accompanying audio figures, which you simply place on the box to play stories, audio plays, and songs.

The company was founded in Düsseldorf in 2013; the holding company, tonies SE, is based in Luxembourg. The Toniebox 2, featuring games via “Tonieplay,” has been available since 2025, and the more affordable Toniebox Lite was added in 2026.

Figures as a Money-Maker: In 2025, tonies generated about 71% of its revenue from the figures (€447.2 million), and only about a quarter from the boxes (€161.2 million). The business model works much like that of printers and ink cartridges: Anyone who owns a box will keep buying new figures over the years—with licenses from Disney, Pokémon, Bluey, and many others. More than 10 million Tonieboxes had been sold by September 2025.

Three regions: North America is the largest market, with €177.0 million in revenue after nine months, ahead of the DACH region (€157.2 million) and the rest of the world, including the United Kingdom, France, and Australia (€88.7 million). The boxes and figures are primarily manufactured in China, with figures also produced in Tunisia. My analysis of how a Chinese hardware manufacturer with its own ecosystem of devices and services is taking the markets by storm is detailed in Xiaomi Aktie.

IPO via a SPAC: tonies went public in 2021 via the SPAC 468 SPAC I, which had been priced at €10.00 per share. Since November 29, 2021, the stock has been traded as tonies SE; the opening price was €12.50. tonies has been part of the SDAX since December 2025.

Revenue by Region for tonies Stock (TNIE), Nine Months of 2026 (as of November 13, 2026) – Source: tonies Investor Relations / Christian Lill

tonies Stock Fundamental Analysis: How Much Is tonies Really Worth?

Fundamentally, tonies is a classic growth stock: Revenue has more than doubled since 2022, but profits are still small and heavily dependent on holiday sales.

For investors, therefore, the key question is whether margins can keep pace with growth.

Growth: Revenue rose from €258.3 million (2022) to €361.0 million (2023) and €480.5 million (2024), reaching €630.3 million in 2025. For 2026, tonies expects more than €760 million; analysts forecast an average of around €781 million, and for 2027, around €945 million.

Margins: Adjusted EBITDA rose to €54.1 million in 2025, with a margin of 8.6%, up from 7.5% in the previous year. The bottom line was a net profit of €13.1 million, corresponding to €0.10 per share. In 2026, the margin is expected to rise to 9–11%, but in the first half of the year it stood at only 0.7% with a net loss of €27.3 million—tonies generates nearly all of its annual earnings in the fourth quarter.

Cash Flow: Free cash flow was negative in 2025 at −€11.9 million because tonies expanded its inventory to accommodate growth. According to NuWays, approximately €64 million flowed out in the first half of 2026. Analysts see this as the company’s key weakness.

Valuation: Based on the analyst consensus for earnings per share (€0.36 for 2026, €0.58 for 2027), the P/E ratio stands at approximately 37 and 23, respectively. Because earnings and cash flows do not yet have a stable track record, the Stock Finder uses revenue as a benchmark for tonies: On average over the last six years, investors paid 1.9 times revenue; currently, the figure is 2.2. Based on revenue estimates from seven analysts, this results in a fair value of approximately €14.22 per share at the end of 2027 (range: €13.76 to €14.64)—slightly above the current price. The valuation is therefore primarily a bet that tonies will achieve its target margin of 16 to 18% by 2030. Just how long a turnaround can take when growth isn’t cooperating is illustrated by Evotec Aktie – where the restructuring is still deep in the red.

Fair Value Valuation of tonies Stock (TNIE) for 2027 (as of Nov. 13, 2026) – Source: Aktienfinder / Christian Lill

tonies Stock Price Targets and Forecast for 2027

Analysts see an average price target of €18.31 for the tonies stock, representing about 38% upside potential—from a technical analysis perspective, a strong buy signal emerges above the record high of €14.60, opening up a target range of €18.45 to €20.10.

As long as the stock holds above €9.80, the uptrend remains intact.

Key price levels:

• All-time high and 52-week high: €14.60 (Oct. 21, 2026)
• Current price: €13.30 (Xetra close Nov. 12, 2026)
• Buy signal: above €14.60
• Target range: €18.45 to €20.10
• Support: €11.47
• Correction target: €9.87
• Critical downside level: €9.80 (below which a correction to €7.95 is expected)

Analyst price targets:

• Average price target: €18.31 (four firms, range €17.25 to €20.00, as of Nov. 13, 2026)
• Berenberg: Buy, €20.00 (August 20, 2026, confirmed September 22, 2026)
• NuWays: Buy, €18.50 (October 21, 2026)
• Oddo BHF: Outperform, €17.50 (October 20, 2026)
• mwb research: Buy, €17.25 (August 20, 2026)

Chart Analysis:

tonies Stock (TNIE) Chart Analysis and Price Targets for 2027 (as of Nov. 13, 2026) – Source: Stock3 / Christian Lill

The tonies stock reached an important milestone in the fall of 2026: The price rose significantly above its initial listing price as tonies SE of €12.50 for the first time and hit a new record high of €14.60 on October 21. After years of trading below these levels, this is a strong signal for early-stage shareholders.

In the medium term, the stock is in a clearly intact uptrend. Since its low in April 2025, it has formed a clean sequence of higher highs and higher lows, supported by a rising trend line. The moving averages are pointing upward, and the price is trading well above the Ichimoku cloud. The indicators also support this picture: The RSI stands at around 61 and still has room to rise, while the MACD is trading above its signal line in positive territory.

The buy signal (blue arrow): A strongly procyclical buy signal will be triggered as soon as the stock sustainably breaks above its record high of €14.60. This would clear the way for the target range between €18.45 and €20.10—representing potential gains of approximately 39% to 51% from the current price.

Where the bulls can remain calm: Bullish market participants currently have little to worry about down to €11.47. A broad support zone runs along that level, where the stock found support on multiple occasions during the spring and summer. Pullbacks down to that level would be nothing unusual within an uptrend.

The indirect scenario (dashed blue arrow): Only a drop below €11.47 would trigger a correction. A possible target would then be the next support zone at €9.87, where the rising moving averages and the upper edge of the Ichimoku cloud converge. From there, a renewed push toward the upside targets would still be possible.

The warning signal (gray arrow): If, on the other hand, the price falls below €9.80, the correction would extend significantly to €7.95. That is the breakout level from the fall of 2024. Only then would the medium-term uptrend be seriously compromised. As long as that is not the case, the upside targets in the range of €18.45 to €20.10 remain possible.

Conclusion: tonies Stock—Is the Next Rally About to Begin?

tonies is growing strongly and is more profitable than it was two years ago; the stock is in an uptrend, just below its all-time high—a breakout above €14.60 would signal the start of the next phase.

Factors working in tonies’ favor include strong growth in North America, the recurring toy figure business, a revenue target of more than €1.4 billion by 2030, and analysts who are unanimously recommending a “buy.” On the other hand, the Nike Aktie —a risk that also looms for tonies, given its production in China.

Factors weighing against the stock include thin margins outside the holiday season, negative cash flow due to inventory buildup, and a valuation with a P/E ratio of around 37 for 2026. From a technical analysis perspective, I consider a strongly procyclical buy signal above €14.60 to be the key; if that occurs, a range of €18.45 to €20.10 is possible. Up to €11.47, the trend remains stable; below €9.80, the correction could extend to €7.95. My analysis of Deutz Aktie.

✅ Opportunities

• Q3 revenue up 27.6% and well above the consensus estimate
• North America grew by 45.3% after nine months and is the largest market
• Recurring figure business accounts for about 71% of revenue
• 2030 target: more than €1.4 billion in revenue and a margin of 16 to 18%
• New markets starting in 2027; Toniebox Lite and Tonieplay as growth drivers
• Buy signal above €14.60, target range €18.45 to €20.10

⚠️ Risks

• 2026 forecast merely confirmed, not raised, despite a strong Q3
• Earnings depend almost entirely on the holiday quarter
• Free cash flow negative due to inventory buildup
• Production is predominantly in China; U.S. tariffs and the dollar exchange rate pose risks
• Valuation at a P/E ratio of around 37 for 2026 is ambitious
• Below €9.80, a correction down to €7.95 looms

Sources

• tonies Investor Relations: Trading Statement for the Third Quarter of 2026 (Nov. 12, 2026)
• tonies Third-Quarter 2026 Earnings Presentation (November 12, 2026)
• tonies Investor Relations: Stock, Shareholder Structure, and Key Figures
• tonies Investor Relations: Financial Calendar
• tonies Press Release: Fiscal Year 2025 (April 14, 2026) and First Half of 2026 (August 20, 2026); Capital Markets Day (June 18, 2026) according to dpa-AFX
• dpa-AFX via finanzen.net, boerse-online, and DER AKTIONÄR: Consensus Q3, analyst reports from Berenberg, NuWays, and mwb research (August 20 to October 21, 2026); finanzen.net: Oddo BHF (October 20, 2026)
• Deutsche Börse (November 29, 2021): Initial listing of tonies SE; tonies IR (April 29, 2021): Placement of 468 SPAC I
• Xetra prices: Alpha Vantage (daily and weekly data through November 12, 2026), investing.com (November 12, 2026)
• Stock3: Weekly chart for tonies SE (Xetra, EUR), as of Nov. 13, 2026
• Aktienfinder: Fair value calculation (revenue) and valuation metrics for tonies, as of November 13, 2026

This is not investment advice—all information is provided solely for financial education purposes.

What do you currently think of $TNIE (-2,07%)?

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$TNIE (-2,07%) is for me an example of a company whose model is very clearly understandable:

The Toniebox serves as a child-friendly, robust audio player. It works via small figures - the "Tonies" - that contain a code when placed on the box, which is used to load content from the cloud. This makes operation extremely intuitive.

On average, a single box leads to around 20 Tonies being purchased in the first 4-5 years. In addition, there are accessories such as headphones, carrying bags, charging stations and merchandising. Overall, this creates a recurring, physical ecosystem that can be easily scaled and whose sales structure is stable in the long term.

Product development and expansion of the ecosystem

The new Toniebox 2 expands this system in a meaningful way: more memory, longer battery life, USB-C, night light, sleep timer and support for the new interactive Tonieplay titles. It remains compatible with all existing Tonies and at the same time enables additional usage scenarios.

New product lines such as Clever Pocket Tonies (for pre-school children, focus on learning), Book Pocket Tonies (complete audio books) and Nightlight Tonies also expand the target group and increase the customer lifetime value.

Operational development and growth

The last few years have been characterized by strong growth. In 2024, sales growth amounted to +34%, with a significant improvement in the EBITDA margin from 4.0% to 7.5%. The North America region developed particularly dynamically (+50% to € 210 million), while DACH continued to grow profitably (+11%). The rest of the world - including the United Kingdom, France, Australia and New Zealand - also recorded strong growth.

This trend continued in Q3 2025:

• Sales growth +52 % year-on-year (+33 % after 9M)
• Regions: North America +36 %, DACH +15.6 %, rest of the world +80 %
• Segments: Boxes +24.7 %, Tonies +36 %, Accessories & Digital +36 %
• Forecast for 2025 confirmed: +25% Group sales, +30% North America
• EBITDA margin expected to be between 6.5% and 8.5

Margins, new suppliers and capacity

An important point: gross margins have been improving continuously since 2022. This is not only due to economies of scale, but above all to the expansion of the supply chain.

Historically, there was only one producer for Tonies (in Tunisia) and one for boxes (in China). In the meantime

• three additional partners for Tonies
• and another partner for Tonieboxes
• have been established.

This ensures better purchasing conditions, more production capacity for future growth and less dependence on individual locations.

Strategy and opportunities

In the DACH region, the focus is now more on profitability - the market is well penetrated (almost every second child of target age owns a box). The main focus here is on more efficient distribution, portfolio optimization and improved unit economics.

North America, on the other hand, remains the most important growth driver: more retail partners, a greater presence at major retailers (e.g. Target, Walmart, Kohl's) and sensibly placed starter bundles.

In the rest of the world, Tonies is increasingly focusing on transferring the profitable model logic from DACH and North America.

Long-term license agreements with Disney, Paramount, Warner Bros, Hasbro, Mattel and NBC Universal as well as our own "Tonies Originals" ensure a secure supply of content and a broad portfolio.

Conclusion

Tonies combines an easy-to-understand, physical-digital business model with sustained strong growth, increasing internationalization and continuous margin improvement. The improvements in the supply chain, new products and the growing proportion of direct sales channels are also strengthening the prospects for profitability. If they continue on their current growth path, I still see plenty of room for improvement.

Let's see what happens.

#growth
#smallcap

$TNIE (-2,07%)

Why are Tonies falling even though the figures are not bad?

$TNIE (-2,07%)

Does anyone know what is responsible for the jump in the price of Tonies?

I think it's never too early to get to grips with the capital market - and that's also true for my son, who will soon be five years old. In a world where financial education is often neglected, I want to give him a feel for long-term investing at an early age.

The basis of his portfolio is a classic MSCI World ETF, which I save with a monthly savings plan of €100. This gives him broad diversification right from the start and allows him to benefit from the long-term growth of the global economy.

I also invest in individual shares that have a direct link to his everyday life and make it easier for him to enter the stock market world. These include:

- $MCD (-0,1%) (McDonald's) - A company that almost every child knows and has a strong global presence.

- $CAT (+0,51%) (Caterpillar) - As a little excavator fan, this is a must in his portfolio.

- $TNIE (-2,07%) (Tonies SE) - He uses the Toniebox every day, so why not invest in the company too?

- $MAT (-0,92%) (Mattel) - With strong brands such as Hot Wheels and Fisher-Price, a company that supplies many childhood products.

I'm less interested in short-term profits than in teaching him through play that companies he comes into contact with every day can also be traded on the stock market. In the long term, he can experience how investments grow - and hopefully learn to appreciate the value of long-term thinking and sound investments.

Hello everyone,

My current portfolio was completely reorganized after the takeover of $COP (-0,62%) at the end/beginning of the year. I have reinvested almost all of the liquidity freed up as a result in small-mid caps. I also see further potential here in the coming years due to more flexible adaptability (with regard to the USA) and financing costs. At the beginning of the year $SESG (+0,61%)
$NA9 (+0,32%)
$TNIE (-2,07%)
$KTN (+0,6%)
$ALCRB (-1,18%)
$DSFIR (+0,48%) made it into my portfolio. Today, I swapped the pipe burner $P911 (-0,09%) in $MUM (-0,9%) . My next idea would be $SIX2 (-3,7%) I would like to hear what else you have on your watchlist in this segment.

Greetings

Micha

For me, 2024 was the most successful year so far, not only because I significantly increased my savings rate, but also because the portfolio performance took off for the first time.

In the past year, I also became much more aware of economic and political issues, which is probably due to my daily consumption of various podcasts on the way to work. The older you get, the more active and involved you feel in many areas.

I feel closer to the market than ever before... as soon as I skip a day, I have the feeling of being left behind. I'll have to think about whether this can still be counted as a feeling of a lack of routine or whether it's already addictive behavior. The user-friendliness of Getquin certainly also plays a role here. 😅

Well, now to the topic.

After another year of exceptional market returns and an impressive rally, the question is what can we expect from 2025?

In this article, I therefore summarize some key findings from recent publications by Goldman Sachs and BlackRock, for example.

I have bundled the content thematically, enriched it with additional sources and added my own comments. In my opinion, the reports provide a good basis for thinking about market opportunities and classifying current trends without going into too much detail. Ultimately, they also give me the feeling that I am well positioned with my own portfolio approach. It goes without saying that the personal assessments I include are not intended as investment advice.

Overview of the topics:

1 . Introduction: Optimism and market rally

2 . Causes of returns: Valuation and earnings growth

3 . Valuations and future returns

4 . Market concentration and global differences

5 . Megatrends and their impact

6 . Political classification and protectionist trends

7 . Growing fragmentation

8 . Investment estimates for 2025

9 . Personal approach

tl;dr

Hopefully the tl;dr is not too tl;dr - the short version today is also a bit extended in bullet points.

Strong market returns since October 2023:

• MSCI World index: +40% since October 2023 (approx. +60% since low 2022).
• S&P 500: One of the strongest rises since 1928, strongly influenced by optimistic expectations of falling inflation and interest rates

Driver of returns in 2024:

• Approx. 50% of returns in USA, due to valuation increases.
• USA: S&P 500 with high P/E ratio (28.5 vs. 10-year average 22.7).
• Japan: Returns driven almost exclusively by earnings.
• Emerging markets: Negative valuation trend, limited growth.

Regional differences and outlook:

• USA dominates the MSCI ACWI (65% weight) with strong concentration on a few tech giants ("Magnificent 7").
• Europe and China: Moderate earnings, less valuation growth.
• 2025: Earnings growth should be the main driver worldwide, e.g. S&P 500 (+11% forecast return) and Japan's TOPIX (+17% growth).

Megatrends and AI investments:

• AI-driven developments remain central (data centers, chips, infrastructure).
• Investments in AI could account for around 2% of US GDP by 2030 -> USD 700 bn.
• Productivity increases through AI promote cross-sector growth.

Geopolitical and macroeconomic influences:

• Increasing trade restrictions (protectionism), shift in trade routes (e.g. Suez Canal).
• Political uncertainties in the USA (e.g. possible deregulation, tax cuts under Trump).

Investment assessments:

• Overweight: US and Japanese equities, especially technology and healthcare sectors.
• Opportunities in emerging markets such as India and Saudi Arabia with moderate weighting.

Long-term changes:

• Megatrends such as digitalization, AI and ageing societies are permanently shaping the economy.
• Geopolitical tensions (USA vs. China) and fragmentation make forecasts difficult, but also offer opportunities.

____________________

• 1 . Introduction: Optimism and market recovery

Driven by optimism about inflation peaking and the prospect of a Fed pivot, the recovery began in October 2023. Since then, the MSCI World Index (see ex. $IWDA (+0,36%) ) alone has gained around 40% (and around 60% since the low point triggered by rising interest rates in 2022) [1].

The S&P 500 (cf. ex. $CSDX ) also had one of the strongest rises since 1928 in 2024 (see Fig. 1).

Fig. 1: Rise in the S&P 500 in 2024 is one of the strongest since 1928

Source: Bloomberg, Datastream, Goldman Sachs Global Investment Research

• 2 . Causes of the returns: Valuation and earnings growth

The return is partly due to strong earnings growth, but almost half is also due to an increase in P/E ratios triggered by growing optimism about lower inflation and lower interest rates (see Fig. 2).

Fig. 2: Half of the global equity return in 2024 is due to an increase in valuations reflecting growing optimism about lower interest rates.

Source: Datastream, Goldman Sachs Global Investment Research

The dark blue area shows the proportion of the return generated by increases in valuation. The light blue area shows the share of returns from earnings growth and the gray area ultimately shows the share from dividend payouts.

The increase in P/E ratios in the current bull market has pushed valuations to historic levels, particularly in the USA. Economies outside the US, such as Europe and China, which are facing greater structural headwinds, have also seen their equity markets re-rate since the low point in Q4, 2023 [1].

Fig. 2 also shows that the MSCI ACWI (see ex. $ISAC (+0,27%) ) was also able to achieve double-digit returns driven by higher valuations due to the high US exposure, whereas the valuation level in the rest of the world has remained "relatively" stable.

The STOXX 600 (cf. ex. $MEUD (+0,17%) ) was only able to achieve a low single-digit gain in this area, with the remaining return coming equally from earnings growth and dividends.

The Tokyo Stock Price Index: Topix (cf. ex. $TPXE (+0,48%) ), which covers the majority of the Japanese stock market, is certainly also worth a look, as the return here is almost exclusively due to earnings growth. Things get interesting for Japan later in the outlook for 2025.

Only in the emerging markets was there even a negative effect on returns in 2024 due to falling valuations.

What remains striking is that the US, with the S&P 500, stands out considerably from the rest in terms of valuation levels in 2024. Many hopes are being pinned on the US, as it is likely to see higher earnings growth and grant companies ever higher multiples.

If we take a look at the historical P/E ratios of the S&P 500, we can see that the current P/E ratio of around 28.5 is well above the 10-year average of 22.7 [3]. In comparison, the current P/E ratio of the S&P 500 Equal Weight, which weights all companies in the index equally, is around 22 and therefore only slightly above the 10-year average of 19.1 [4, 5].

This suggests that the increase is largely due to a changing sector concentration in the S&P 500 and not because the "broad market" has become much more expensive.

In view of the already high growth expectations, there may now be less room for further optimism and the high valuations also allow for less upside potential driven by valuation increases [1].

The following chart shows what partly contradicts this. It shows the MSCI EMU Index in relation to the S&P 500 excluding Nvidia and implies a past outperformance of the eurozone.

(The MSCI EMU Index shows the performance of the eurozone with 222 companies, as at 29.11.2024, approx. 85% of the eurozone).

Fig. 3: European equities outperform the S&P 500 excluding Nvidia

Source: Charles Schwab, Macrobond

It should certainly be noted here that there has been a lot of cherry-picking, along the lines of: "I'll take the period and delete the share, then we'll be better". For me, it does not so much illustrate the superiority over the US equity market, but rather reinforces the relativization of an overvalued level.

• 3 . Valuations and future returns

Will valuations determine future returns? - No, the fact that equity markets have already risen sharply does not affect the prospects for further records. In the current scenario, one could assume that much of the future potential is already priced into the current price level. This could reduce the attractiveness, as the ratio of risk to potential return appears less favorable.

Goldman Sachs believes that given the high starting point of valuations, the performance of the index is largely dependent on earnings growth. The next 12-month returns are generally only good if earnings are positive in line with expectations. Periods of high valuations and additional earnings declines are usually associated with relatively flat market returns [1].

However, Goldman Sachs' forecasts generally point to positive earnings growth, with returns of 11% forecast for the S&P 500 over the course of 2025.🔮

In the following Figure 3, the forecast for 2025 shows that the majority of the return in the S&P 500 is expected to be driven by earnings growth (see light blue area), with a small proportion coming from dividend payouts and even a decline in valuations, which will then have a negative impact on returns.

What is really exciting is Goldman Sachs' valuation for Japan's TOPIX $TPXE (+0,48%) which is expected to grow by a full 17% and significant valuation increases are to be expected.

Fig. 4: We expect earnings to become the most important driver of index returns in most regions over the course of 2025.

Source: Goldman Sachs Global Investment Research

• 4 . Market concentration and global differences

As we head into 2025, Goldman Sachs emphasizes the vulnerability of a correction due to already strongly anticipated returns on the one hand and the unusual degree of market concentration on the other. The US equity market accounts for around 65% of the MSCI ACWI and the ten largest US stocks account for more than 20% of the total value of the global index (the weight of the five largest US companies already accounts for almost 15%) [1].

The good news is that the largest US companies have significantly outperformed the index and have achieved much stronger earnings growth. Their outstanding position can therefore also be explained by their first-class fundamentals and not just by excessive valuation [1].

The following chart illustrates once again how total returns and earnings are tightening and developing compared to the rest of the world. Thanks to solid corporate earnings, US equities have outperformed the rest of the world. BlackRock sees the divergence between markets widening as megatrends reshape more and more economies and sectors, creating further opportunities but also risks [2].

Fig. 5: Performance of US equities compared to the rest of the world, 2010-2024

Source: BlackRock Investment Institute with data from LSEG Datastream

• 5 . Megatrends and their impact

This is precisely why BlackRock believes that the outperformance of US companies will continue, as the US is benefiting from the megatrends that are driving earnings. This is supported by favorable growth prospects, as well as possible tax cuts and deregulation [2].

While some valuation metrics such as P/E ratios may appear high, they may only tell part of the story. For example, the changing composition of sectors in the equity markets shows that change is taking root. Comparing today's index to that of the past would be like comparing apples to oranges, similar to what Goldman Sachs suggested above with changing sector concentration [2].

Even though in 2024 outperformance of US large cap technology stocks was only achieved by 15% of companies globally and the Magnificent 7 remain attractive, Goldman Sachs believes that the investment universe should be broadened more and returns should come from a broader front in the index as the trend towards lower interest rates increases.

Goldman Sachs also points to greater geographical diversification. While they are confident about the US economy, the extent of outperformance allows for selective opportunities for geographic diversification. As mentioned above, the highest return forecasts are for Japan, for example [1].

Taking into account projected growth, there are also some areas such as the UK, selected emerging markets and China, all of which have lower PEG ratios. Again, this should not be seen as a reason to overweight these markets at the expense of US exposure, but selectively undervalued companies can be found here and there are good opportunities [1].

Ultimately, the largest companies will continue to benefit the most from efficiency gains, as they are also investing heavily in megatrends, which is currently very evident in the Magnificent 7's investments in AI infrastructure, for example. [2]

BlackRock also sees great potential in the area of AI development in particular and emphasizes that we are still in the development phase - an important part of the general infrastructure boom. According to estimates, investments in data centers, chips and energy systems could exceed USD 700 billion by 2030, which would correspond to around 2% of US GDP [2].

The question of whether too much is being invested in AI is a valid one, but should be considered in the bigger picture given the potential to generate new revenue streams across the economy. Further winners may emerge in unexpected areas, with productivity gains in one sector driving value creation in others. Signals that investors should look out for include new revenue streams and cross-sector impacts [2].

BlackRock continues to present various near-term scenarios (see Fig. 6) for how 2025 may unfold based on the lessons learned. BlackRock sees the most likely scenario for the next six to twelve months as weaker US growth than before the pandemic, but with returns overall above the current level and not too high an AI valuation for the current fundamentals. As a result, US companies are showing strength, the AI-driven rally is broadening and US equities continue to outperform [2].

Fig. 6: Adjustment of our short-term scenarios

Source: BlackRock Investment Institute, December 2024

For decades, economies were characterized by stable long-term trends. It was possible to focus almost exclusively on managing temporary deviations from these trends. Sooner or later, growth would return to trend. This was one of the key principles of portfolio construction. According to BlackRock, the environment has now changed fundamentally. Megatrends can fundamentally reshape economies. Taking AI as an example, it emphasizes that the AI transformation could well eclipse the Industrial Revolution, for example [2].

Furthermore, the world is grappling with increasing geopolitical fragmentation that is redirecting traditional trade flows and disrupting supply chains. New trading blocs and protectionism can change structures and hinder trade. The digitalization of finance is changing the way people and businesses handle cash, credit, transactions and investments. With ageing populations, the labor shortage is growing, which could slow down production and growth if productivity is not increased through AI. Increasing immigration is counteracting this in some countries, but probably only temporarily... especially in the USA [2].

For these reasons, the current data says nothing about the economic cycle, but shows how the trend is changing. What might be surprising is how permanent these trend changes are.

BlackRock uses the following chart to show how the global economy could change as a result of new and short-term trends. It represents a break with the period before the pandemic, when there were only minor deviations from a "central" trend [2].

Fig. 7: If the trend is constantly changing - hypothetical development of our GDP

Source: BlackRock Investment Institute, December 2024

• 6 . Political classification and protectionist trends

Many governments in developed countries are facing major constraints such as high inflation, low voter support and, outside the US, a lack of growth. One can expect a strong focus on national issues, such as the economy and security, possibly at the expense of other issues. A stronger focus on short-term goals, forcing governments to implement their agenda quickly, is also possible given frequent changes of power. As a result, politics itself could promote instability in an already fragile world with increased strategic competition between the US and China.

Trump has promised voters big changes. Tax cuts, deregulation and support for fossil fuels are viewed positively by the markets in the short term [2]. This is less true for other plans. These include restrictions on immigration and the many announced tariffs, which could fuel geopolitical fragmentation and inflation [2].

The chart below reinforces the current picture and shows the number of unilateral trade-restrictive interventions in the form of trade restrictions by countries around the globe. More and more trade restrictions have been imposed worldwide in recent years. The globalization that defined the period after the Second World War is giving way to increasing protectionism.

Fig. 8: Growing protectionism - trade restrictions between 2014 and 2023

Source: BlackRock Investment Institute

If a government lets macroeconomic stabilization measures such as fiscal policy framework conditions and inflation targets slide, the financial markets could be left with the task of demanding more fiscal policy [2].

• 7 . Growing fragmentation

Competition between the US and China is likely to intensify in 2025 as more tariffs and measures to protect strategic sectors, especially cutting-edge technologies such as semiconductors, are expected. Competitive advantages in the race to expand AI will also depend on how quickly infrastructures such as power grids and data centers can be built [2].

Energy supply is also of central importance. China's low-cost, low-carbon technologies, particularly electric cars, solar panels and batteries, are putting pressure on companies in other major economies and triggering protectionist reactions. Europe's car manufacturers are feeling the pressure, while Brussels is looking for a coordinated response [2].

The rerouting of shipping routes since 2023 also reflects the severity of the increasing conflict in the Middle East, which is leading to a shift in trade flows away from the Suez Canal (see Fig. 9)

Fig. 9: Relocation of shipping routes - daily transit traffic, 2023 - 2024

Source: BlackRock Investment Institute and IMF with data from UN Global Platform and PortWatch, December 2024

• 8 . Investment estimates for 2025

In view of the findings, BlackRock is increasing its overweight in US equities. BlackRock also remains overweight Japanese equities and sees opportunities from a tactical and strategic perspective [2], similar to those already indicated by Goldman Sachs [1]. Among the emerging markets, India and Saudi Arabia are mentioned, which are caught up in the megatrends. In individual sectors, the focus continues to be on technology and healthcare.

The following table provides a good summary of the possible positioning and orientation:

Table 1: Six to twelve month tactical views on selected assets and major asset classes and our positioning in December 2024

Source: BlackRock Global Outlook 2025

• 9 . Personal approach: Core satellite

What is my personal takeaway? I am sticking to my tried-and-tested "core-satellite" strategy. The FTSE All-World$VWRL (+0,32%) forms the core of my portfolio with its broad diversification. Despite the high proportion of US equities, I still feel well positioned here and benefit from the expected outperformance.

My Nasdaq 100 $CSNDX (+0,14%) complements the focus on the tech sector and takes the AI rally and future trends with it. For the time being, I am refraining from additional investments in individual stocks from areas such as cloud computing, semiconductors or renewable energies. Together, the two ETFs make up around 70% of my portfolio and form a solid core that lets me sleep soundly.

Further stability is provided by individual stocks such as McDonald's $MCD (-0,1%) Coca Cola $KO (+0,23%) and Munich Re $MUV2 (+1,33%) which shine with defensive characteristics and are less dependent on valuation increases.

LVMH $MC (-0,01%) , Waste Management $WM (+0,39%) and Siemens $SIE (-1,11%) out of conviction and personal interest. And yes, Bitcoin $BTC (-2,49%) should not be missing, the speculative volatility is simply fun 🙂. The Tonies SE $TNIE (-2,07%) is my speculative outlier: a deliberate risk, but one that I believe has a lot of potential. Maybe I'll write a longer article about this in the future.

What remains? I'm relatively sure about my core. However, in view of the investment horizon of several decades, I need to think more carefully about whether the weighting and selection of satellites should ultimately be more closely aligned with potential "megatrends". I feel well positioned for the next stock market year, although FOMO still regularly kicks in for me too.

• How did you feel in 2024 and what lessons have you learned for this year? Be bolder and take more chances, or would you rather be more defensive?
• What are you most looking forward to this year?
• How do you rate the current valuations?
• What other risks do you see in the dynamic global environment?

Take your pick 😬

Thanks to everyone who has read this far!

#2024
#2025
#goldmansachs
#blackrock
#megatrends

Sources & Links:

[1] Goldman Sachs (2024) 2025 Outlook: The Year of the Alpha Bet
https://www.goldmansachs.com/pdfs/insights/goldman-sachs-research/2025-equity-outlook-the-year-of-the-alpha-bet/2025Outlook.pdf

[2] BlackRock (2025) Global Outlook 2025 https://www.blackrock.com/de/professionelle-anleger/literature/brochure/blackrock-bii-ausblick-2025-pc-de-at.pdf

[3] Stock finder: This is how expensive the S&P 500 is
https://aktienfinder.net/index-profil/SP%20500-Index

[4] ishares portfolio key data for the S&P 500 Equal Weight UCITS ETF https://www.ishares.com/de/privatanleger/de/produkte/328658/ishares-s-p-500-equal-weight-ucits-etf?switchLocale=y&siteEntryPassthrough=true

[5] Invensco S&P 500 Equal Weight ETF Key Statistics https://shorturl.at/jL05h