In 2025, the technology and communication-services sectors saw significant gains, led by AI giants Nvidia and Alphabet. Consumer defensive and real estate stocks struggled, with the Morningstar US Market Index ending the year up 17.4%.

The Morningstar US Technology Index gained 21.4% in 2025, with semiconductor companies like Nvidia and Broadcom leading the charge. Software infrastructure firms, including Microsoft and Palantir, also made significant contributions to the tech sector’s growth.

Despite overall sector success, software application companies faced challenges in 2025 as AI technology disrupted the industry. Salesforce and ServiceNow saw declines, impacting the tech index’s gains. Meanwhile, Alphabet stood out in the communication-services sector, contributing to the overall market return.

Consumer defensive stocks, including Procter & Gamble and Costco, struggled throughout the year, detracting from sector gains. Real estate stocks, like Equinix and Alexandria Real Estate Equities, also faced challenges, with sluggish growth and rising costs impacting their performance in 2025.

Read more at Morningstar: These US Stocks Drove the Market’s Gains in 2025