Wider Tech Sector Led S&P 500 to Another Double-Digit Gain

Despite tariff uncertainty, AI bubble fears and widespread economic discontent caused by stubbornly high prices, the U.S. stock market reached new highs in 2025. Once again, the so-called "Magnificent Seven", i.e. Apple, Amazon, Microsoft, Meta, Alphabet, Tesla and Nvidia were the main drivers behind the rally, as they accounted for 42 percent of the S&P 500's 17.9-percent return for the year. Fueled by the ongoing AI investment cycle, Nvidia alone saw its share price climb almost 40 percent, contributing more than 15 percent to the market-cap-weighted index's full-year return.

According to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, the information technology and communication services sectors, i.e. most things tech, were responsible for 63.1 percent of the S&P 500’s total return last year. Excluding companies from these two sectors, the index would have returned just 6 percent in 2025.

Other major contributors to last year's market rally were the financials sector, which contributed 12 percent to the S&P 500's return and the industrials sector, which accounted for just under 10 percent of the index's total return in 2025. At the other end of the scale, the consumer discretionary and consumer staples sectors didn't fare so well, reflecting the financial hardship that many consumers faced in 2025. In previous years, the consumer discretionary sector played a larger role in the S&P 500's overall performance due to inclusion of mega caps Amazon and Tesla. Both companies saw more modest returns of 5.2 and 7.7 percent in 2025, respectively.