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One industry in particular dominated last year.
It was another good year for technology stocks, but there was a sector that outperformed tech stocks in 2025.
The best performing sector last year was Communication Services, which returned about 33% in 2025. Communication Services includes predominantly telecommunications firms, as well as media and entertainment industry companies. The sector includes stocks like Alphabet, Netflix, Meta, Walt Disney, Verizon, and Warner Bros Discovery to name a few.
It was the media and entertainment firms that led the way last year, with Alphabet rising about 65%, Warner Bros Discovery soaring 170%, and satellite and mobile communications provider EchoStar rising some 378%. This was the second straight year that this sector performed the best.
Communication Services performed better than Information Technology, which returned about 24% in 2025. The IT sector includes most of the big name technology and semiconductor stocks like Apple, Nvidia, Microsoft, Broadcom, Palantir, Micron, Oracle, and Taiwan Semiconductor, among others.
Top performers for 2025 included Micron, up about 240%, Palantir, up about 135%, and Western Digital, up roughly 290%.
Industrials Performed Well
Another sector that beat the overall S&P 500 last year was Industrials, which returned about 21%. This sector includes two major segments that drove returns last year – defense and aerospace and AI data center infrastructure.
Some of the leaders among Industrials were GE Aerospace, which returned around 86%; Howmet Aerospace, which returned 90%; Caterpillar, which returned 61%; and AI data center stocks Vertiv and Applied Digital, which returned 150% and 231%, respectively.
Financials also performed well, returning about 15% last year. Financials got a boost from a surge in retail trading, which helped companies like Robinhood soar some 233%. Also, it was a great year for M&A, which helped investment banks like Goldman Sachs rise some 62% last year.
The Materials sector posted a return of around 12%, buoyed by a surge in the price of gold and the demand for natural resources to power electronics.
MP Materials, a rare earth miner that has contracts with the U.S. government and tech giants like Apple, soared some 275%. Newmont Corp., the leading gold miner, saw its stock price surge 168% last year, while Ablemarle, which produces lithium for electronics, saw its stock jump some 56%.
These stocks came from the one industry that outperformed all others in 2025 – Metals and Mining. Stocks within the Metals and Mining industry returned about 85% last year.
Another Rough Year for Real Estate Stocks
There was only one sector that had a negative return in 2025 – that would be Real Estate, which was down about 1%. It should come as no surprise as the real estate market has struggled in recent years with high rates, rising prices, and lack of supply.
Other sectors that stumbled compared to the benchmark were Consumer Staples, which returned roughly 1%, and Consumer Discretionary, which returned about 6%. These sectors were hurt by inflation and pocketbook concerns by consumers.
Finally, stocks within the Energy sector returned about 7% last year.