TL;DR

The Financial Times’ Unhedged newsletter has identified eight dominant themes that shaped 2025 markets, from the AI spending race and valuation concerns to the surprising comeback of international stocks and the muted impact of tariffs.

The AI Arms Race

Big tech companies spent “kajillions” on data centres and AI models, with markets making clear distinctions between spending approaches. Alphabet fared well while Oracle and Meta faced scrutiny. The DeepSeek emergence from China suggested no company may build an unassailable technological lead, regardless of spending—a concern markets seemingly filed away rather than fully processing.

Valuations and Concentration

Key questions emerged: Can a bull market be sustainably driven by just a few stocks? Do high valuations predict near-term falls? The FT’s assessment: concentration appears sustainable, valuations tell little about short-term direction, and if there’s a bubble, it extends beyond just AI stocks to the broader market.

International Stocks Recover

The US equity premium may finally be shrinking. Every major stock market beat the US this year—even in local currencies. Whether driven by Trump’s policy uncertainty, EU and Japan fiscal expansion, Asia’s tech manufacturing boom, or simple mean reversion, international diversification paid off in 2025.

Other Defining Themes

Gold’s unusual strength: Outperformed despite not-terrible conditions, supported first by central bank buying, then by momentum-chasing investors.

Tariffs less damaging than feared: Impact on trade, deficits, profits and inflation proved moderate—essentially a tax the system can bear, especially given administration backtracking when effects become severe.

Value and staples struggles: Value stocks performed brilliantly abroad but not in the US. Staples stocks remained unloved.

Private assets questions: Concerns about risk-adjusted returns and the flood of money into private markets. The push toward liquidity and retail access may dilute what made the asset class distinctive.

The Vibesession Continues

Perhaps most puzzling: the economy remains “fine”—jobs wobbly but not collapsing, spending holding up, profits strong—yet people feel lousy. Strong markets make this disconnect more acute. Part political division, part inflation, part inequality, but the full explanation remains elusive.

Looking Forward

For UK businesses watching global markets, 2025 demonstrated that dominant narratives can shift rapidly. The AI theme that powered tech stocks also raised questions about sustainability. International diversification proved its worth. And the gap between economic data and public sentiment suggests unresolved tensions that may shape 2026.