2025 in the Markets: AI, Turbulence and a Tale of Two Performances

The Telegraph, the Financial Times, Economist, Reuters, and Bloomberg contributed to this report.

2025 was a wild ride on Wall Street and beyond – a year that saw markets powered by tech dreams, rattled by politics, and reshaped by global flows.

The big story of the year was, without question, artificial intelligence. AI’s influence on markets was huge, with tech giants and chipmakers leading rallies and investor enthusiasm. Heavyweights like Nvidia briefly hit record valuations – even becoming a $5 trillion company at one point – as demand for AI hardware and software drove optimism across indices. But the streak wasn’t smooth: sharp swings and valuation worries kept analysts on edge, with some comparing parts of the rally to past bubbles.

This enthusiasm didn’t lift all boats equally. US stock indexes, while posting gains, lagged international peers for much of the year. Markets in Asia and Europe – especially emerging markets with heavy tech and metals exposure – outpaced US returns, buoyed by a softer dollar and strong demand for AI-related commodities.

Geopolitical and policy shifts also left their mark. Trade tensions and tariffs introduced volatility early in the year, causing bouts of market stress and corrections before rebounds took hold. Despite fears that these moves could spark deeper downturns, markets ultimately showed resilience into year-end.

On the corporate front, mergers and acquisitions surged, with some massive deals underscoring both optimism and risk appetite among corporations looking to scale and innovate.

But it wasn’t all tech glory. Traditional consumer stocks, chemicals, and advertising firms struggled, dragged down by weaker demand and structural shifts in digital advertising and supply chains.

As 2025 closes out, investors are jittery yet hopeful. Some see potential for a “Santa Claus rally,” though recent underperformance in year-end trading temper those hopes. Others are looking beyond AI – into healthcare, banks, and international markets – for more stable opportunities in 2026.

In short: 2025 was a year of AI-driven highs, political headwinds, and a more multi-polar market landscape – one where global equities and sector rotations challenged the notion that US tech dominance would carry everything higher.