How did US stocks do in 2025?
US shares had a good year, supported by strong company profits, healthy consumer spending, and continued investment in technology. Big names in artificial intelligence (AI) grabbed headlines, but growth wasn’t limited to tech. Financials, industrials, and healthcare also delivered solid results.
That said, some AI-related stocks saw prices rise faster than their earnings. This makes careful stock picking more important than ever. The key is to focus on businesses where growth can justify today’s valuations, rather than assuming everything will keep going up.
What’s the outlook for the US economy in 2026?
We’re optimistic. Companies are spending more on technology, automation, and research. Tax rules that allow them to write off these costs are also helping. These investments are boosting productivity, enabling firms to grow without big increases in hiring.
Consumers remain in good shape too: wages are higher than before the pandemic, household finances look healthy, and tax refunds should support spending, especially among the middle class. Overall, US economic growth is expected to stay steady at around 2–2.5%, while inflation continues to ease. This creates a positive backdrop for stocks.
Are valuations a worry?
Valuations are above average. But today’s market is led by strong, fast-growing companies that deserve a premium. Importantly, earnings growth has kept pace with rising share prices. This makes the situation very different from past bubbles. Investors remain disciplined. They focus on businesses with reliable profits, strong balance sheets, and the ability to invest through market ups and downs.
Where does AI fit in?
AI is a big theme, but it’s not just about a few tech giants. There are opportunities in companies that enable AI, like semiconductor makers and cloud providers, and in sectors using AI to cut costs and improve efficiency. We’re already seeing real benefits, such as better profit margins and productivity gains. These gains should support growth across the economy.
Any other areas to watch?
Growth is spreading across more sectors. Financial services look strong, especially those tied to capital markets and digital payments. Industrials focused on automation and electrification are benefiting from rising energy demand and data centre expansion. Healthcare also stands out, from medical technology and diagnostics to biotech and animal health.
What’s the takeaway for investors?
The outlook for large US companies is positive, but selectivity is key. Businesses that use AI effectively, invest consistently, and maintain strong margins are in a good position. They can grow earnings, pay dividends, and handle market ups and downs. Together with innovation, capital investment, and resilient consumers, these factors create a solid foundation for long-term growth in 2026.
Important information
Janus Henderson Fund Managers UK Limited was appointed as the AIFM of the North American Income Trust with effect from 1 August 2024. Prior to that date, the North American Income Trust’s AIFM was abrdn Fund Managers Limited and all information contained in this document should be considered accordingly.
