The Top 4 Performing Stocks in 2025 Were All From the Same Sub-Industry. Are They Still Buys for 2026?

When looking for potential stock buys for the coming year, it's sometimes helpful to look at the worst-performing stocks in the market during the past year. But it's also counterintuitively beneficial to examine the best -performing stocks. While the worst-performing stocks can reveal a stock that is undervalued or due for a turnaround , the best-performing stocks may also reveal a long-term structural positive change in a business or industry. In 2025, 4 out of the top 5 performing stocks in the S&P 500 were all in the same artificial intelligence (AI) sub-industry. Heading into 2026, are they still buys, or over-extended and subject to a crash? Image source: Getty Images. Data storage is exciting again The top 4 out of 5 performers in the S&P 500 this year were: 569.6% 292.3% 228.7% 208.8% Data source: Finviz. All of these companies are involved in data storage, albeit across different technologies. SanDisk was previously part of Western Digital, but the two companies split on Feb. 24, 2025, separating SanDisk's NAND flash technology business from Western Digital's hard disk drive (HDD) business. Micron is the largest of these companies and not only produces NAND flash, but also DRAM volatile memory. Seagate, meanwhile, is a rival to Western Digital in the HDD space. NASDAQ: MU Key Data Points NAND flash, DRAM, and HDDs are all types of data storage technologies. NAND and HDDs are both non-volatile memory technologies, meaning they store data even when power is turned off. DRAM memory is a much faster type of memory, but it only functions when power is turned on. DRAM, especially high-bandwidth memory, has been in high demand since the advent of ChatGPT and the expansion of generative AI , as AI model training requires massive amounts of data to be fed quickly. Moreover, the DRAM industry is highly consolidated, with only three major players: Micron, SK Hynix, and Samsung. However, what surprised investors this year was the massive increase in stocks involved in nonvolatile storage across both the NAND and HDD industries. The storage industry: Boom-and-bust, though now even more so The past few years of underperformance from the HDD and NAND industries set the stage for this year's storage boom. HDDs are an older technology that has seen its adoption across many applications dwindle to almost zero. However, HDDs still remain the most cost-effective method for bulk data storage in vast quantities. Thus, HDDs have still remained the bulk storage platform of choice for cloud hyperscalers. And while the newer NAND flash technology has been replacing HDDs in many legacy applications and also certain data center applications, oversupply has still been a problem. The NAND flash industry has five major players, with China's Yangtze Memory Technologies actually adding another sixth capable player to the mix in recent years. Not only has heightened competition made profitability challenging for NAND, but the verticalization of NAND flash cells, or "3D NAND," first introduced in 2013, has made supply much easier to grow than other forms of memory....

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