Yoo Jae-heung, left, a senior portfolio manager at AllianceBernstein, speaks during a press briefing at the Federation of Korean Industries building in Seoul, Thursday. Courtesy of AllianceBernstein

The U.S. stock market will continue to outperform other world markets in 2025, AllianceBernstein, a global investment firm, said Thursday. Rather than the large-cap tech stocks that fueled growth in 2024, it identified opportunities in undervalued sectors, such as industrials and health care.

"We maintain a strong preference for the U.S. stock market this year," Lee Jae-wook, AllianceBernstein's senior portfolio manager specializing in equities, said at a press briefing, "The U.S. market is expected to deliver solid earnings per share growth."

Lee said the earnings per share of the U.S. stock market is projected to reach 15 percent this year. By comparison, the Eurozone and Japan are expected to grow between 8 and 10 percent, and emerging markets 15 percent.

"Forecasts tend to become more volatile over time," Lee said. "Although emerging markets and the Eurozone also show strong earnings growth, the U.S. remains the preferred market due to its lower volatility."

Addressing concerns about high U.S. stock valuations, Lee noted that this is largely driven by specific stocks, including the Magnificent 7 (Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Nvidia and Tesla).

"The S&P 500's price-to-earnings ratio may appear high at 24.6 times, but excluding these few outliers, the figure is around 17 to 18 times. Most stocks within the index are not as overvalued as some fear," Lee said. "The U.S. market delivers high profitability amid this volatile time, so it's natural for a premium to be applied."

Lee also highlighted industrial and health care as sectors to watch, predicting their earnings growth could reach as high as 20 percent this year. "These overlooked sectors could offer attractive valuations and significant opportunities," he said.

In addition, the "carry and roll" strategy was highlighted as an effective bond investment approach. This strategy focuses on interest income from mid- to long-term bonds with a steep yield curve while taking advantage of the roll effect, where yields decline as bonds approach maturity.

Yoo Jae-heung, a senior portfolio manager at AllianceBernstein specializing in the bond market, said credit bonds are a more attractive option than U.S. Treasurys.

"U.S. credit bonds benefit from exceptionally strong supply and demand dynamics, while the fundamentals of the U.S. companies issuing these bonds remain solid," Yoo explained.