Here are some things that were surprising in 2025:
1. Only two of the Mag 7 stocks outperformed the S&P 500. Only Google and Nvidia beat the market in 2025:
Microsoft, Tesla, Amazon, Apple and Meta all underperformed.
That’s pretty surprising considering all the AI/tech bubble talk we’ve heard all year.
2. Major tech stock valuations didn’t go to the moon. Besides Tesla, valuations for the giant tech stocks were more or less unchanged:
The price-earnings ratios even fell for Broadcom, Nvidia, Amazon, Oracle and Apple.
Of course, there are other metrics you can look at. But on a valuation basis, tech stocks didn’t enter a bubble in 2025.
Maybe the bubble is still coming, but it looks like it didn’t happen last year.
3. Still no recession. Maybe AI hasn’t entered a giant bubble, but many people believe that all the capital expenditures of tech companies have more or less buoyed the economy.
This graph of Michael Harpsichord puts it in perspective compared to the other major spending spree in history:
Spending on AI certainly appears to have blunted the impact of tariffs on the economy.
It felt like we were close to a downturn in April with the Tariff Tantrum. The betting markets were certainly concerned:
Rates, 9% inflation, 8% mortgage rates, 5% Fed Funds Rate… none of that has derailed the economy.
Maybe the real surprise will be when we Doing fall into a recession.
4. Stocks that worked in 2025. Chart Kid Matt divided the S&P 500 into deciles towards 2025:
This shows that the stocks that were beaten the most (far left) and the stocks that were already doing well (far right) were the two best-performing baskets.
Buying momentum is at play And the defeated value plays worked.
That’s strange in the same year.
5. International stocks performed better. Finally!
Take a look:
Foreign stocks from developed and emerging markets both outperformed the U.S. stock market by double digits.
By my calculations, the ~14% outperformance for the MSCI EAFE versus the S&P 500 is the largest difference since 1993.
Yet no one seems to care!
I think it will take another year or two before more investors notice this.
We’ll see.
6. Self-driving cars are here. My family took a trip to Scottsdale this past week to get out of the cold in the Midwest. The first thing I noticed when I left the airport was that Waymos were everywhere.
It’s quite bizarre to see cars driving around everywhere without anyone in the driver’s seat.
I made it a point to get one just to have the experience. I wanted my children to experience it too.1 It was just as magical as everyone says it is. That first ride was surreal, like something you only see in movies.
Ten years ago it felt like this wouldn’t happen. Now Waymo says they will have completed 14 million rides by 2025.
I told my kids that the next 10 to 20 years will be crazy: self-driving cars, AI, robotics, etc.
I know that this period will bring challenges. There will be setbacks. Certain jobs and groups of people will be displaced. The transition phase will be bumpy. At some point we will eventually enter a recession. Maybe the AI bubble will burst.
But I can’t imagine being pessimistic about the future if we can create a self-driving vehicle.
I remain optimistic about the future.
Josh, Michael and I talked about all these surprises and more this week on The Compound and Friends:
Or watch the podcast version here:
Further reading:
The biggest risks in 2026
1They all laughed at me because I was so excited about it.
#surprises #wealth #common #sense