On December 20, Scott Wren, senior global market strategist at Wells Fargo, appeared on CNBC’s ‘Closing Bell Overtime’ to discuss which sectors are winners and where stocks may be headed going into 2026. Wren stated that the market is currently trading above the midpoint of his firm’s year-end target range. He observed a strong desire for the market to move higher and detailed specific defensive rotations his team made. Specifically, Wells Fargo moved Communication Services from overweight to even weight in August, followed by a similar downgrade for Information Technology four or five weeks ago. While these two sectors still represent nearly 50% of the S&P 500’s market cap, Wren’s team has been trimming those positions to buy into Financials, Utilities, and Industrials, seeking to maintain an AI theme from a different angle.
A day before this, on December 19, Keith Lerner of Truist joined CNBC’s ‘Closing Bell Overtime’ to talk about the day’s market action. Lerner provided a broader perspective on the market cycle and noted that the NASDAQ and S&P 500 have been bobbing within specific ranges. He explained this stagnation as a cooling-off period following one of the largest six-month returns in history, during which the tech sector rose 70% off its lows. He suggested that the market is correcting through both time and price to temper elevated expectations. Looking ahead to next year, Lerner’s base case is a modest economic uptick. He cited historical data showing that in the seven instances since 1950 where a bull market turned three years old, all saw gains the following year. Additionally, he noted that when the Fed cuts rates while the market is near all-time highs, the market has historically been up 12 months later 90% of the time, leading him to conclude the underlying trend still deserves the benefit of the doubt.
That being said, we’re here with a list of the 10 best performing S&P 500 stocks in 2025.
Our Methodology
We sifted through the Finviz stock screener to compile a list of S&P 500 stocks (including spin-offs) that had the highest year-to-date performance. We then narrowed down our selection to 10 stocks with the most hedge fund ownership, as of Q3 2025. The stocks are ranked in ascending order of their year-to-date performance.
Note: All data was sourced on December 22.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10 Best Performing S&P 500 Stocks in 2025
10. Tapestry Inc. (NYSE:TPR)
Number of Hedge Fund Holders: 60
Year-to-Date Performance as of December 22: 97.41%
Tapestry Inc. (NYSE:TPR) is one of the best performing S&P 500 stocks in 2025. On December 17, Baird analyst Mark Altschwager raised the firm’s price target on Tapestry to $140 from $130 with an Outperform rating on the shares. The firm anticipates a more favorable environment heading into 2026, expecting consumer stimulus to pave the way for robust revenue and earnings growth, particularly once the initial impact of tariffs subsides after the first half of the year.
A day prior to this rating, Wells Fargo analyst Ike Boruchow raised the price target on Tapestry to $135 from $125 with an Overweight rating on the shares. The firm is leaning more bullish on the sector heading into 2026. Despite a bifurcated market, Wells Fargo cited three key tailwinds: resilient early holiday consumer spending, favorable tax policy changes, and the potential for corporate windfalls if tariffs are repealed or refunded.
Additionally, earlier on December 12, Jefferies analyst Ashley Helgans raised the firm’s price target on Tapestry to $142 from $135 and kept a Buy rating on the shares. After adjusting price targets across its fashion coverage, the firm is prioritizing stocks with strong existing momentum over speculative turnaround stories. The firm believes that the market is currently betting on a resilient consumer and a favorable tariff environment in the near term.
Tapestry Inc. (NYSE:TPR) provides accessories and lifestyle brand products in North America, Greater China, rest of Asia, and internationally. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman.
9. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 61
Year-to-Date Performance as of December 22: 100.86%
KLA Corporation (NASDAQ:KLAC) is one of the best performing S&P 500 stocks in 2025. On December 16, Bank of America raised the firm’s price target on KLA Corporation to $1,450 from $1,400, while maintaining a Buy rating on the shares. BofA is adjusting its price targets across the US semiconductor sector and suggests that 2026 marks the halfway point of a decade-long transition toward upgrading traditional IT infrastructure for AI-driven workloads. Stock volatility may persist as investors scrutinize AI returns and hyperscaler spending, but the firm believes that this pressure will be balanced by the expansion of AI factories and LLM developers.
On the same day, Cantor Fitzgerald upgraded KLA Corporation to Overweight from Neutral with a price target of $1,500, up from $1,350. After beating the S&P 500 by 30 points in 2025, the SOX is expected to remain a market leader through 2026. Cantor Fitzgerald believes that the scale of AI infrastructure spending outweighs any short-term cyclical concerns.
Earlier on December 15, Jefferies upgraded the company to Buy from Hold with a price target of $1,500, up from $1,100. The firm cited KLA Corporation’s dominant position in leading-edge manufacturing as AI scales and believes that the current buildout will catalyze demand for advanced chips, memory, and packaging technologies. With the stock’s valuation recently resetting to more attractive levels, Jefferies sees KLA Corporation as a primary beneficiary of the accelerating investment in AI infrastructure.
KLA Corporation (NASDAQ:KLAC), together with its subsidiaries, designs, manufactures, and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide.
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