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S&P 500 Continues Its Stellar Run to Open New Year: 4 Solid Picks

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Key Takeaways

  • The S&P 500 opened the year up 0.2%, extending a tech-led rally after a 16.4% gain in 2025.
  • Amazon.com, Inc. benefits from Prime-led retail scale and a dominant AWS position in cloud infrastructure.
  • AppLovin Corporation posts expected earnings growth of more than 100% for the current year.

The S&P 500 had a remarkable 2025, powered by tech stocks, especially those focused on artificial intelligence (AI). The index ended in the green on Friday, the first trading day of the year, despite failing to put up an impressive show in the final week of last year.

The Santa Claus rally lost its steam in the final days of 2025, with the S&P 500 finishing off with four consecutive sessions of losses. However, the index had a stellar year after almost entering a bear market to begin with.

Given the index’s solid performance since 2023, it would be ideal to invest in S&P 500 stocks, such as Amazon.com, Inc. (AMZN - Free Report) , Analog Devices, Inc. (ADI - Free Report) , AppLovin Corporation (APP - Free Report) and Cadence Design Systems, Inc. (CDNS - Free Report) , which have strong potential in 2026. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

S&P 500 on Solid Run

The S&P 500 ended 0.2% higher on Friday to close at 6,858.47 points, opening the first trading day of the year on a high. On Dec. 23, the benchmark had hit a record closing high of 6,909.79 points.

The S&P 500 had a solid 2025 despite economic, domestic and geopolitical tensions. The benchmark started 2025 positively on optimism surrounding President Donald Trump’s pro-business agenda. However, concerns grew over the economy’s health after Trump, weeks into his presidency, announced sweeping tariffs on almost all the trading partners of the United States, sparking fears of a global trade war.

By April, stocks were down almost 18% for the year, pushing the index to the brink of a bear market. Momentum shifted after Trump paused the tariffs, began trade talks with U.S. allies, and reached new trade deals with several countries. From there, the index reversed course and has continued to climb steadily.

The index gained 16.4% in 2025, driven by a tech rally as investors continued to place their bets on AI stocks. The S&P 500 has now recorded its eighth consecutive month of gains and the eleventh quarter of gains in thirteen quarters, following a stellar 2023 and 2024, both of which saw AI stocks scoring big,  according to a CNBC report.

The index surged 24% in 2023, followed by a 23% rise in 2024, according to the report. The S&P 500 has now gained nearly 80% in the past three years to record its best winning streak since the 2019-2021 period and the second best since 2000.

3 S&P 500 Stocks With Growth Potential

Amazon.com, Inc.

Amazon.com, Inc. is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. AMZN’s online retail business revolves around the Prime program, well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish a footprint in the physical grocery supermarket space. AMZN also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service space, thanks to Amazon Web Services.

Amazon.com has an expected earnings growth rate of 29.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. AMZN presently has a Zacks Rank #2.

Analog Devices, Inc.

Analog Devices, Inc. is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed-signal and digital signal processing (DSP) integrated circuits. ADI’s product line is composed of amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors.

Analog Devices’ expected earnings growth rate for the current year is 25.7%. The Zacks Consensus Estimate for the current-year earnings has improved 5.3% over the past 60 days. ADI currently has a Zacks Rank #2.

AppLovin Corporation 

AppLovin Corporation provides a technology platform that enables developers to market, monetize, analyze and publish their apps. 

AppLovin Corporation’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current-year earnings has improved 1.2% over the past 60 days. APP currently sports a Zacks Rank #1.

Cadence Design Systems, Inc. 

Cadence Design Systems, Inc. is a leader in the electronic system design space. CDNS’ Intelligent System Design strategy aids users to transform design concepts into reality by offering computational software, hardware and IP.

Cadence Design Systems’ expected earnings growth rate for the current year is 18.3%. The Zacks Consensus Estimate for the current-year earnings has improved 0.4% over the past 60 days. CDNS currently carries a Zacks Rank #2.

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