This has been a good year for many Nasdaq-100 stocks. Investors remain bullish about growth stocks, even though there were some worries that the U.S. economy is slowing down, with layoffs on the rise. Stocks involved in tech have particularly done well due to the ongoing optimism about opportunities related to artificial intelligence (AI).
As of Dec. 15, the top-performing stocks on the Nasdaq-100 index for the year were Micron Technology (NASDAQ: MU), Warner Bros. Discovery (NASDAQ: WBD), and Palantir Technologies (NASDAQ: PLTR). Let’s consider what has been behind their impressive performances and see whether they may be poised for even greater gains in 2026.
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Micron Technology stock has returned a total of 177% thus far in 2025 (including its dividend). It’s in the business of selling memory and storage solutions, and demand for those is soaring as tech companies continue to invest in the infrastructure to expand their AI capabilities.
Demand has been so robust for Micron’s data center products this year that the company says it is exiting its consumer-focused Crucial brand so that it can focus on larger and more strategic customers. It’s a great problem to have, to be able to focus on faster-growing segments where margins and growth opportunities can be far more lucrative.
In its fiscal 2025, which ended on Aug. 28, the company’s sales rose by 49% to $37.4 billion, with net income skyrocketing from less than $800 million to $8.5 billion. Micron’s growth has been incredible, and with the stock trading at an estimated 14 times its future earnings (based on analysts’ expectations), it can still be a great buy heading into next year.
The second-best Nasdaq-100 performer so far this year is Warner Bros. Discovery: Its total return is up 173% right now. The stock has been surging, not because of strong growth or improved profitability, but because there is a bidding war for the company going on involving Netflix and Paramount Skydance. Warner Bros. Discovery was planning to split up, but now Netflix is trying to buy the larger Warner Bros. segment (which will include its streaming operation, its catalog, and its studios), while Paramount is bidding for the whole company.
The competing offers have lifted the shares, but the entertainment company itself hasn’t been doing that well. It has incurred net losses in three of the past four quarters. It has also found it challenging to grow revenues.
This also means that there’s plenty of risk with holding on to the stock heading into 2026. If the bidding war intensifies, shares of Warner Bros. Discovery could go higher. If, however, antitrust regulators get in the way of a deal and neither one goes through, the stock could quickly fall in value.
Investing in a stock based on the hopes that a bidder will offer a higher acquisition price is a risky tactic, which is why I wouldn’t buy Warner Bros. Discovery stock now.
The third-hottest Nasdaq-100 stock is Palantir Technologies. Its total return is 148% this year, and what’s impressive is that it’s building off an incredibly strong performance in 2024 when it soared by 341%. Both Micron and Warner Bros. Discovery lost value last year.
Palantir has been a big name in AI, as its data analytics platform has been winning over both government and commercial customers. In the third quarter, its revenue grew 63% to just under $1.2 billion. CEO Alex Karp has been excited about the company’s performance, citing its impressive Rule of 40 score of 114% as an illustration of its incredible success, and why it’s a great business to invest in.
While Palantir has performed exceptionally well, I don’t think it’s prudent for investors to ignore valuations. Sooner or later, a market correction may be inevitable, given how hot tech stocks have been over the past few years. And Palantir, trading now at a price-to-earnings multiple of more than 420, may be among the stocks most vulnerable to a slide in a wider downturn.
Palantir stock has come down by about 14% from its peak of over $207, as investors may finally be losing their willingness to overlook its lofty valuation, and that’s why I wouldn’t buy it either. It’s priced for perfection, and that leaves investors exposed to a lot of downside risk.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Palantir Technologies, and Warner Bros. Discovery. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
