The Best S&P 500 Index Stocks This Year: Can They Outperform Again in 2025?
TradingKey - As the year 2024 comes to a close, the S&P 500 Index has delivered an astonishing 27% return, surpassing expectations and continuing its impressive rally from the previous year.
Among the index’s standout performers, five stocks have captured the spotlight as the best-performing companies in the large-cap index. They have delivered eye-popping returns for investors. The big question for investors now is: can they sustain this momentum into 2025?
Here’s what’s driving each company’s performance, their key growth prospects, and what lies ahead.
- Palantir Technologies: The AI boom’s golden child
2024 Return: +341%
Palantir Technologies (NASDAQ: PLTR) emerged as the star performer of 2024, fuelled by skyrocketing demand for its Artificial Intelligence (AI) data analytics. The company’s generative AI capabilities have revolutionised decision-making for governments and corporations alike. This meteoric rise even catapulted Palantir into the S&P 500 Index in the middle of the year.
Looking ahead, the challenge for Palantir will be maintaining its rapid growth in an increasingly competitive AI landscape. Its hefty valuation, with a price-to-earnings (PE) ratio of 318x, leaves little room for error.
Investors should focus on its ability to secure new contracts and sustain its current momentum while keeping an eye on any potential headwinds from rival AI platforms.
- Vistra Corp: The energy player powering AI
2024 Return: +277%
Vistra Corp (NYSE: VST) soared in 2024, thanks to its pivotal role in powering AI data centres. The company’s expertise in nuclear, natural gas, and solar power positioned it as a key player in meeting the energy needs of the rapidly-expanding AI sector. Vistra’s discussions with data centre developers to expand capacity further boosted investor confidence.
In 2025, all eyes will be on whether Vistra can translate these opportunities into sustained earnings growth. The energy sector’s inherent volatility presents risks, but Vistra’s focus on renewable energy and partnerships in high-demand regions could drive further upside.
Investors should also watch for regulatory shifts or policy changes that might impact its growth trajectory.
- NVIDIA: Still the King of Chips
2024 Return: +166%
NVIDIA Corporation (NASDAQ: NVDA) saw its streak of dominance continue in 2024, solidifying its status as the cornerstone of the AI revolution. With record-breaking quarterly earnings and the rollout of its Blackwell AI chip, NVIDIA has once again demonstrated its ability to capitalise on the insatiable demand for cutting-edge semiconductors.
As we move into 2025, NVIDIA faces two key challenges: maintaining its leadership position amid intensifying competition and justifying its valuation, which, while lower than in prior years, remains significantly higher than many “Big Tech” peers.
The success of its Blackwell chips and the broader adoption of AI-driven solutions will be critical in determining whether NVIDIA can keep its growth trajectory intact.
- GE Vernova: Green energy dynamo
2024 Return: +157%
Spun out from General Electric earlier this year, GE Vernova (NYSE: GEV) hit the ground running. With a focus on renewable energy, including wind and solar, the company has tapped into a growing wave of environmental consciousness among investors.
For 2025, GE Vernova’s ability to execute large-scale renewable energy projects will be pivotal. The transition to clean energy is fraught with logistical and regulatory hurdles, and how the company navigates these will influence its growth.
Additionally, any shifts in government incentives or funding for green energy (with a renewable energy-sceptical Trump administration coming into power) could significantly impact its prospects.
- Axon Enterprise: Public safety, supercharged
2024 Return: +151%
Axon Enterprise (NASDAQ: AXON) has carved out a unique niche, providing public safety technology like tasers, body cameras, and dashboard systems for law enforcement. The company’s innovative integration of AI into its product ecosystem has enabled it to capture market share and expand its influence globally.
Axon’s AI-powered tools are enhancing law enforcement efficiency and safety, making its premium offerings increasingly attractive to clients. With software now accounting for a significant portion of its business model, Axon has unlocked new streams of recurring revenue, contributing to its consistent but durable 25% to 30% growth.
This trend is expected to accelerate in 2025 as AI adoption continues to expand, positioning Axon as a key player in the modernisation of public safety technology while opening doors to untapped markets and global expansion.
However, its reliance on government spending for law enforcement budgets remains a double-edged sword. Any economic downturns or government budget cuts could pose challenges to its growth trajectory.
The road ahead in 2025
The top S&P 500 stocks of 2024 dazzled with spectacular returns, each driven by transformative trends like AI, clean energy, and public safety technology. However, sustaining such momentum is no small feat.
As we move into 2025, investors should keep an eye on these companies’ ability to innovate, expand their markets, and navigate challenges in their respective industries. Past performance is certainly no guarantee of future success, but a thorough understanding of the opportunities and risks can help investors make more informed decisions.
