Anyone who invested in the tech sector in January 2024 was sitting pretty by December. Meanwhile, anyone who invested in the worst-performing sectors—materials, healthcare, real estate and energy—were left clutching paltry gains and cursing their ill-fated choice.
Oh, the difference a few weeks can make.
The tech sector has floundered in 2025 as big tech stocks stall in the face of political and economic uncertainty. Nvidia has found itself square in the crosshairs of a tug of war between the US and China, benefiting from stuff like executive orders to build more AI data centers, but suffering from restrictions on what kind of chips can be exported from the US.
The push and pull has yanked shares of Nvidia down 3.07% this year. Meanwhile, once high-flying Palantir, which gained nearly 400% in 2024, has fallen 13.55% in 2025 as investors worry that overvalued risk assets may not be worth it until worries about inflation, interest rate cuts, and tariffs are laid to rest.
Don’t call it a comeback
On the other hand, the worst performers of 2024 are doing just fine in 2025.
Materials brought up the rear last year as high interest rates took a toll on the manufacturing industry—after all, when no one can afford the loans needed to build stuff, no one needs the materials to build with. The Materials Select Sector SPDR ETF, which tracks this sector, sank 1.36% over the course of 2024, while the Technology Select Sector SPDR gained 28%.
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Now, the tables have turned: The materials ETF is up 1.85% in 2025, while the tech-tracking ETF has fallen 2.86% this year.
It’s not just the materials sector that has reversed course. The healthcare sector was the second-worst performer in 2024, but the ETF tracking that sector is the second-best performer in 2025, up 2.83% so far. And the energy sector, which came fourth from last in 2024, is leading the pack this year, rising 5.36%.
How to invest
We’re still in the early innings of 2025, so it’s probably a bit early to shift all of your assets from tech to materials. That said, there are signs that materials, healthcare, and energy can keep up the momentum.
The Institute for Supply Management’s Purchasing Managers Index, or PMI, rose for the first time in ages last month, indicating that the manufacturing industry may be beginning to recover as inflation recedes. Healthcare has received a ton of attention lately as AI makes inroads into the industry, and analysts expect the new tech to create new opportunities for investors to profit. And energy has soared alongside oil prices this year, which may continue in light of ongoing geopolitical conflict, OPEC production cuts, and President-elect Trump’s plans to re-focus investments from clean energy to fossil fuels.
The market has already upset the status quo just two weeks into 2025. Only time will tell if yesterday’s losers will turn into tomorrow’s winners.—MR