2025 was a big year for diamond-fisted investors who held on.
The U.S. Stock Market ended the year with firm gains, with all three major indexes managing to reach new heights, attributed to their solid performance in corporate earnings, tech stocks, and continued investor confidence.
Much of the growth displayed by the major indexes was attributed to the continued momentum of artificial intelligence. NVIDIA, the continued leader in the semiconductor industry, as well as data analytics from Palantir, stood out as two of the major winners this year. Their strategies revolved around artificial intelligence to help drive the company's value while continuing to attract investor interest. Simultaneously, continued support from investors in AI leaders like OpenAI further proves that artificial intelligence remains a major pillar in the global stock market, as reported by Yahoo Finance.
This sudden surge, however, has sparked concerns over company valuations that may be outpacing and exceeding fundamental performances. "I think no company is going to be immune, including us," quoted by Sundar Pinchai, CEO of Alphabet, in an interview with BBC, reported by Reuters. Other investors and analysts have pointed out the possibility of a sharp collapse, reminiscent of the 1990s dot-com bubble, according to Reuters.
On the contrary, other market voices argue that today's AI boom will have a different outcome in contrast to the earlier ones, as the big tech firms are generating real profits and revenues. This now leaves the investors on the fence in deciding whether current market prices reflect sustainable growth or a lofty risk, according to Seeking Alpha.
The S&P 500
The S&P 500 saw an increase in value from roughly 17% to 19% in 2025, earning its third consecutive year of double-digit margin. This accomplishment is mostly credited to the second half of the year, mostly driven by an increase in large tech companies, as well as improving earnings trends, according to MarketWatch.
The SPDR S&P 500 ETF Trust reported a combined total of around 15.8% for the year, as reported by TotalRealReturns. The Vanguard S&P 500 ETF provided similar returns and continued to attract investor interest due to its broad market exposure and low costs, according to TechStock2. "A fourth straight year of blockbuster returns for the S&P 500 isn't out of the question," according to an analysis from Fundstrat Global Advisors cited by MarketWatch.
The NASDAQ
The NASDAQ Composite finished out the year outperforming the broader market this year, with a total increase of more than 20% in revenue. This strong performance comes from continued investor demand for companies with an AI and tech background, FinancialContent reported.
This surge in value can be reflected in the NASDAQ-focused ETFs. The Nasdaq Composite increased about 19.23%, while the Invesco QQQ Trust, tracking the NASDAQ-100 Index, reported an estaimted 22.7% increase this year, according to TotalRealReturns. Similar to the S&P 500, analysts cited by StockAnalysis attributed this tremendous growth to large tech firms that contributed to market gains throughout the year.
The First Trust NASDAQ-100 Equal Weighted Index (QQEW) also tracks the NASDAQ-100, but provides equal weight to its respective holdings rather than measuring by market capitalization. Data provided by the ETF Database also shows strong growth in 2025.
Part of the lift came from the continued enthusiasm around AI's real-world value as well as investors' confidence in higher prices, as reported by Financial Content. The market backdrop also played a role in the index's increase in value as stocks were buoyed by Federal Reserve rate cuts, which usually drives growth and tech shares due to lower rates can be projected to make future profits more valuable, according to Reuters.
This margin was reflected in the NASDAQ-focused ETFs. The Invesco QQQ, responsible in tracking the NASDAQ 100 index, is weighted heavily towards the market's biggest companies, meaning that its performance is closely related to the big tech stocks, according to Invesco. Finbox valuates the prices of QQQ's year-to-date price at around 22.7%, further explaining the reason behind such a large market gain this year is due to the big tech companies.
The Dow Jones
The Dow Jones Industrial Average also finished the year with higher numbers, with an approximate 13% to 14.5% increase, as reported by Barron's and AP News. While the Dow underperformed in comparison to NASDAQ and the S&P 500, it still recorded a solid year, reporting double-digit gains, according to AP News and The Economic Times.
Investors who are looking for exposure to the Dow frequently refer to the SPDR Dow Jones Industrial Average ETF Trust (DIA), which gives insights into the performance of the index's 30 large-cap components. This ETF maintains a close supervision of the Dow's movement throughout the year, publishing a year-to-date of an estimated 14% as of late this month, as reported by State Street Investment Management and the Chief Investment Office.
This performance is shown in Dow-focused investment products. The SPDR Dow Jones Industrial Average ETF Trust (DIA), responsible for tracking the Dow's 30 largest companies, is frequently being used by investors looking for exposure to the index. The DIA reflect a 14% year-to-date gain, which closely observes the Dow's fluctuations, as reported by State Street Investment Management. Analysts informed AP News and Reuters that the Dow benefited from corporate earnings, but fell short in tech oriented indexes due to insufficient exposure to AI-centered rally.
Looking Back
Diving into a deeper examination over the past 5 years, U.S. values have comfortably delivered above long-term historical averages. The S&P 500 has had a history in producing heavy compounded growth, as a result of large tech stocks that dominated the market before and after the pandemic.
Simultaneously, NASDAQ and the Dow have successfully outpaced its benchmarks, with the NASDAQ's tech-oriented stock outweighing the Dow's blue chip industrial priorities, as reported by Curvo.
The difference in performance has become even more apparent in the past decade with the NASDAQ Composite leading by more than 330%, with an annual compound at around 15.8%. The S&P 500 finishes in second place with an estimated 216% return, around 12.1% annually.
The Dow finishes last with a growth valuated at around 159%, with an estimated annual return of 12.1%. These massive growth can be attributed to the influence of technology and AI companies, according to Nasdaq.
Looking Ahead
As the market look ahead into the new year, expectations remains divided. Some analysts continues to put faith into AI investment and potential interest-rate cuts, while others remains cautious of increased valuations that could cause pullbacks, as reported by Reuters.
Peter Schiff, who remains as a voice for those more cautious of the market in the upcoming year explains his concerns over prolonged monetary stimulus and increasing government debt could inflate the U.S. dollar.
"King dollar's reign is coming to an end. Gold will take the throne as the primary central bank reserve asset. That means the U.S. dollar will crash against other fiat currencies, and America's free ride on the global gravy train will end. Prepare for a historical economic collpase," as quoted by Schiff on X, reported by Financial Express.
On the other hand, increased earnings and economic resiliance could help support major indexes such as the S&P 500, the NASDAQ Composite, and Dow Jones in the upcoming year, as reported by analysts on Reuters.
