December is usually window-dressing season on Wall Street, when traders dump losers and chase winners to polish year-end returns. This year, though, instead of piling into the tech giants that powered the S&P 500, investors are rotating into the names that spent most of 2025 collecting dust.

The rise and the fall: Since US equities bottomed in late November, the market’s shift has been unmistakable. Small-cap stocks have led the charge — with the Russell 2000 climbing nearly 10% to a record, micro-cap names rising ~12%, and cyclical groups like trucking, shipping, and airlines posting ~11% gains. At the same time, tech titans that carried the market all year like NvidiaNVDA

and MicrosoftMSFT

have seen their rallies stall as investors question whether the AI trade has become too crowded.

• The shift points to rising confidence that the US economy could accelerate in early 2026, encouraging traders to take bigger bets on beaten-down value names while easing off tech.
• Bank of America strategist Michael Hartnett is urging clients to buy inexpensive mid-caps into 2026, pointing to relative upside in homebuilders, retailers, REITs, and transportation stocks.

Diamonds in the Rubble

The damage at the bottom of the S&P 500 has been severe. Twelve stocks in the index are down more than 40% this year, led by fintech firm FiservFI

, which plunged after cutting its full-year revenue outlook, while Digital advertiser Trade DeskTTD

has also slid as competition from AmazonAMZN

squeezed revenue. Similarly, former Wall Street favorites like Lululemon AthleticaLULU

and Chipotle Mexican GrillCMG

have fallen as consumers pulled back.

• Mizuho’s Dan Dolev says Fiserv has likely bottomed, pointing to its 7.5x forward earnings multiple and management’s efforts to repair pricing decisions that hurt sales partners.
• Most analysts remain bullish on Trade Desk, with Guggenheim’s Michael Morris citing confidence in a 2026 rebound driven by new products and growth in connected-TV and audio ads.

The consensus: Some analysts argue the wreckage may be creating opportunity, noting that the market’s 10 biggest annual losers have historically posted average gains of about 4.7% the following year. Even so, Charles Schwab’s Kevin Gordon cautions that gains are unlikely to broaden smoothly, with fewer Fed rate cuts ahead and signs of a softening labor market. What’s clear is that stocks once left for dead are drawing fresh interest — and for bargain hunters willing to dig through the rubble, some of 2025’s biggest disasters could become 2026’s most surprising winners.