BATMMAAN’ Stocks: December Heroes Eye 2025

After a strong rally throughout most of 2024, the U.S. stock market has hit a rough patch in December, with investors gravitating back to megacap technology stocks.

The “BATMMAAN” stocks—Broadcom, Apple, Tesla, Microsoft, Meta, Amazon, Alphabet, and Nvidia—have dominated market gains. Broadcom’s rise past the $1 trillion market capitalization threshold cemented its place alongside the original “Magnificent Seven,” as these eight tech giants continue to drive the market higher. Since November’s election, this group has added $1.9 trillion in market value, accounting for over 85% of the S&P 500’s total increase during that time.

Narrowing Breadth and Market Concentration

The rally that began broadly after the election has narrowed considerably this month. While information technology, consumer discretionary, and communication services sectors remain in the green, most of the market has struggled. This concentration has pushed the S&P 500 toward a monthly loss, even as the Nasdaq Composite, fueled by tech-heavyweights, has climbed 2.5%.

The S&P 500 is now at one of its most concentrated levels in decades. Five stocks—Apple, Nvidia, Microsoft, Alphabet, and Amazon—account for the highest combined weight in the index since the early 1990s. Analysts warn this dependence on a handful of companies increases risks, as the index’s performance becomes less diversified.

The AI Boom and Valuation Questions

A significant driver of these megacap stocks’ dominance is their heavy investment in artificial intelligence. Companies like Nvidia and Broadcom have reported impressive earnings growth linked to AI infrastructure. However, others, including Apple and Tesla, show slower growth, leading to concerns about overvaluation. If these companies fail to meet high expectations or AI optimism fades, their stock prices could face downward pressure.

Broader Market Performance

Despite the recent slowdown, 2024 has been a more balanced year compared to 2023. Gains have extended beyond megacap tech, with 10 of the S&P 500’s 11 sectors set to finish the year higher. Small- and midcap stocks have also seen stronger performance, though they continue to lag their larger counterparts. The S&P 500 is on track for its first back-to-back annual total returns exceeding 25% since 1998, a significant milestone.

Outlook for 2025

Looking ahead, Wall Street expects slower but steady growth in 2025. Analysts anticipate earnings improvements for the broader market, but challenges remain. Rising Treasury yields, stagnant growth outside megacaps, and questions about AI’s long-term impact could dampen enthusiasm. The 10-year Treasury yield, now near its highest levels since May, has climbed roughly 100 basis points since September, raising borrowing costs and possibly limiting investment outside of tech giants.

Investors may soon demand clearer results from AI-related investments. While Nvidia and similar companies have delivered, others must prove their strategies can translate into sustained earnings growth. If not, attention may shift to value stocks and sectors with more attractive valuations.

What Lies Ahead?

The policy backdrop, including an accommodative Federal Reserve and anticipated tax cuts, is expected to support the market into 2025. Even if the AI rally falters, these factors could prevent broad-based losses. As the year wraps up, a light economic calendar offers little new data, leaving the focus on how markets position themselves for the new year. Despite December’s challenges, major indexes are set to finish the year with significant gains, underscoring the resilience of select segments of the market.