Many investors found profit in their endeavors this year, even as labor cooled and policy rates fell. While 2024 was a landmark year in which AI transitioned from hype to practical use, 2025 marked the year AI development crossed the point of no return. It’s time to unpack the notable storylines that drove the markets during 2025.
1) By the Numbers: S&P 500 + Jobs Market
The financial markets stayed strong even as the labor market showed signs of cooling. By the market close on December 16, 2025, the S&P 500 had risen approximately 15.6%, outperforming the long-term average annual return of around 10-12%. This signaled to investors that corporate earnings and risk appetite held up despite ongoing debates on how fast the economy is slowing.
The labor market, however, had a slower year. In November, the economy added 64,000 jobs while the unemployment rate rose to 4.6%—its highest rate since September 2021, according to The New York Times. The high unemployment rate is a classic sign that the economy is softening: rising unemployment can decrease consumer spending and corporate earnings.
2) AI Goes Industrial: The Capex Boom Wave + Big Tech
AI software improved at an unprecedented rate, and an industrial buildout of chips, data centers, and power rose alongside its growth. UBS estimated that global AI capex—capital expenditure, or the money companies use to build long-term AI infrastructure—reached approximately $423 billion in 2025 and projected that this number would reach $571 billion in 2026. This huge amount of spending indicates that companies believe AI demand is real and big enough to justify building the infrastructure to support it.
Big Tech made big strides this year in converting AI usage to real profit: Microsoft Cloud generated $46.7 billion in revenue (up 27% year-over-year), while Nvidia’s Data Center generated a revenue of $51.2 billion.
The $5 Trillion Moment: Speaking of Nvidia, it reached a milestone that represented the sheer rapidity of AI development this year. On October 29, Nvidia became the first company ever to reach a market value of $5 trillion, an indication of AI’s profound changes to society.
3) EV Market Plateaus
After years of hype, 2025 served as a reality check for the Electric Vehicle (EV) industry. Demand slowed, as Reuters reported that November global EV sales growth was the slowest since February of last year. This slowing of EV adoption has shaped the spending of some large automaker companies, like Ford. On December 17, Ford canceled a $6.5 billion EV battery-supply deal with South Korean company LG Energy Solution. Additionally, Ford announced that they would cancel several electric vehicle models, like the F-150 Lightning, and would instead invest in developing their more profitable hybrid models.
4) Crypto’s Wild Year
Cryptocurrency, headlined by Bitcoin, delivered 2025’s most dramatic boom-and-bust arcs. After starting the year at a high of $95,000, Bitcoin peaked in October to a price of around $126,223 before dropping back in the $80,000s range in mid-December. The current price reflects over a 30% fall from the October record high, reminding investors that even the “mainstream” crypto can fluctuate fast.
5) Two Stocks That Defined 2025
Winner: Google (Alphabet). Alphabet set the standard as 2025’s “AI + fundamentals” company, investing to integrate AI innovation into its business model. With the release of new Gemini models and the paramount Gemini 3 Pro, as well as maintaining strength across services like Search, YouTube, and Google Cloud, Alphabet’s stock was up over 60% year-to-date as of December 11. The theme was clear for 2025 markets: investors rewarded companies that could pair AI with real cash flows.
Loser: Chipotle. Chipotle was a strong brand that saw its growth expectations cool, and its stock price followed suit. The stock was down over 40% year-to-date as of December 11, making it one of this year’s notable underperformers. A major driver of this loss was its initial expensive valuation and the softer momentum of the fast-casual restaurant segment overall.
6) What to Watch in 2026
Looking ahead at the next calendar year, these are a few key questions that experts are keeping tabs on to succeed in their market investments:
- Labor market cracks: Watch unemployment, wage growth, and hiring momentum; higher unemployment may lead to weaker corporate earnings.
- Interest rates and inflation: Will the Fed keep cutting rates, or will inflation get sticky?
- AI capex reality check: Will profits catch up to spending and expectations?
- Consumer strength: Keep track of retail spending and credit card delinquencies because consumer demand drives many companies’ revenues.
To conclude, the winners of 2026 will likely be the investors who stay disciplined on fundamentals, while watching these macro indicators as the headlines turn up.
