The 12 best US stocks of 2025, plus three that could run into trouble

Wall Street’s hottest stocks have delivered extraordinary gains this year, but a few may be running out of steam.

Investors may be feeling anxious about this year’s best US stocks and make the mistake of jettisoning the big winners too early. Picture: Getty Images

Investors have a love/hate relationship with winning stocks. While everyone wants a winner, the bigger the gain, the more the anxiety about what comes next.

Barron’s took a look at the year’s hottest stocks to see if investors should be worried. What we found could help calm some nerves, and might even stop investors from making the mistake of jettisoning the big winners too early.

Coming into the week, the S&P 500 was up about 16 per cent year to date, putting it on pace for a third consecutive double-digit annual gain, with the possibility of a third consecutive rise of more than 20 per cent. About 60 per cent of S&P 500 stocks are up this year, and the average gain for shares was about 10 per cent.

A handful of S&P 500 stocks have done much better. Not counting Warner Bros Discovery, whose stock has taken off because the company is going through a widely discussed sale process, the names were as follows, through midday on Tuesday.

• Western Digital, the maker of data-storage hardware
• Robinhood, the financial technology platform
• Seagate Technology, a provider of data-storage hardware
• Micron Technology, also in the data-storage business
• Newmont, the gold miner
• Palantir Technologies, an AI software company
• Lam Research, which makes equipment for semiconductor manufacturers
• Amphenol, a producer of electrical components
• Intel, in the chips business
• Applovin, an AI software platform
• KLA, a maker of semiconductor equipment
• NRG Energy, a power company.

Those 12 stocks were up an average of 145 per cent year to date, through midday trading on Tuesday. On average, they also trade for about 43 times the earnings expected over the next 12 months, up from 33 times a year ago. The S&P 500 trades for closer to 22 times.

The dozen winners, including gold miner Newmont, are expensive for a reason.

The dozen winners are expensive, but for a reason. Their growth has been spectacular. Earnings for the 12 are expected to grow by an average of roughly 80 per cent in 2025 as Intel flips from a loss in 2024 to a profit. Earnings growth in 2026 is expected to be 40 per cent.

That means the price-to-earnings-to-growth, or PEG, ratio for the dozen is about one, meaning that factoring in how rapidly their earnings are rising, the stocks aren’t crazily expensive. The S&P 500’s PEG ratio is closer to two times.

To be sure, at least nine stocks have strong ties to the AI trade, putting them at risk if sentiment worsens regarding artificial intelligence. A single bad quarter from Nvidia, seen as a bellwether for investment in AI infrastructure, could disrupt everything, says Ocean Park Asset Management chief investment officer James St Aubin.

But the AI theme remains a risk and opportunity for the entire market. Three of the winning dozen look a little wobbly for other reasons.

Palantir is the most expensive and has one of the highest PEG ratios, at 2.3 times. Only 31 per cent of analysts covering the stock rate shares Buy, according to Bloomberg, way below the average of 63 per cent for the dozen big winners. The average Buy-rating ratio for S&P 500 stocks is about 58 per cent currently.

Wall Street ratings are somewhat subjective, but analysts are paid to understand the industries they cover, so what they say is worth considering.

KLA is tied for the highest PEG ratio with Palantir, and analysts aren’t as optimistic as they once were. The stock has lost two Buy ratings in the past three months, leaving it with 12. Two downgrades from Buy might not seem like a lot, but it is the highest total among the dozen stocks. Currently, 40 per cent of analysts covering KLA shares rate them Buy.

Intel is trading at the largest premium to the average analyst price target. Picture: AFP

And Intel is trading about 13 per cent above its average analyst price target, the largest premium in the dozen. Only 12 per cent of analysts covering the stock rate shares at Buy.

Those three look the most vulnerable, based on Barron’s criteria. While the stocks could continue to impress, posting better-than-expected earnings growth in 2026, investors might want to watch them more closely.

As the saying goes, past performance isn’t a guarantee of future success.

Barron’s