Heading into the end of 2025, the stock market seems to be at a crossroads. The S&P 500 is hovering near an all-time high, but after surging for the last three years, expectations of a pullback seem to be increasing.
Talk of an AI bubble has grown, leading to a sell-off in November, and the economy is showing clear signs of weakness. Consumer sentiment has tumbled, putting pressure on a number of retailers, and the labor market is struggling, with the unemployment rate hitting a four-year high.
In other words, this looks like the kind of stock market where the gap between winners and losers is growing. Keep reading to see two stocks that look like winners heading into 2026.
Image source: Getty Images.
1. Micron
Memory chipmaker Micron (MU 3.21%) may have been an underrated AI play for the last few years, but the secret is out after the company's latest earnings report.
Micron crushed estimates and gave even better guidance for its fiscal second quarter. Overall revenue jumped 57% to $13.6 billion, and its division with the most exposure to AI, cloud memory, grew by 100% to $5.3 billion. Demand continues to soar for its high-bandwidth memory (HBM) chips, which are a key component of the AI stack, and the company pulled forward its forecast for HBM growth, saying it now expected the total addressable market for HBMs to reach $100 billion by 2028, ahead of an earlier forecast of 2030.
NASDAQ: MU
Key Data Points
In addition to the soaring revenue, Micron is also seeing its margins expand thanks to rising prices, lower costs, and a favorable product mix. Operating margin jumped from 25% to 45%, and adjusted earnings per share climbed from $1.79 to $4.78.
What really makes Micron worth doubling down on right now is its dirt cheap valuation, a sign that Wall Street has continued to underestimate the stock. Following the report, EPS estimates for fiscal 2026 jumped from $18.10 to $31.88, nearly quadrupling from the $8.29 it reported in the year before. Based on that estimate, the stock trades at less than 9 times forward earnings. Though that partly reflects a sector where pricing dynamics are notoriously cyclical, it also shows how cheap the stock is.
That should give investors confidence that the stock can still go significantly higher even as it just reached an all-time high.
2. Dollar General
Consumer-facing stocks might be under pressure, but the combination of persistent inflation and flat job growth has led to more Americans trading down to cheaper goods when they shop, and that's good news for Dollar General (DG 6.14%).
In its third-quarter earnings report, the company posted same-store sales growth of 2.5%, and the company said it was seeing more traffic from higher-income customers. Dollar General is a countercyclical business, meaning it tends to do better when the economy is weak. For example, same-store sales soared in 2008 and 2009 during the depths of the great financial crisis, so economic challenges should work to the company's favor.
NYSE: DG
Key Data Points
Additionally, the company has made real progress in its strategic initiatives, including limiting out-of-stocks and ensuring the checkout area is adequately staffed. That helped drive a significant improvement in gross margin, which rose from 28.8% to 29.9% in the third quarter, benefiting from lower shrink and higher inventory markups.
As a result of its margin improvements, the company raised its earnings per share guidance from $5.80-$6.30 to $6.30-$6.50 for the year.
Based on that forecast, the stock trades at a forward P/E of 21.5, which looks like a good price to pay for a stock like Dollar General that's getting tailwinds from both internal improvement and macro-level effects.
Dollar General continues to open new stores, targeting 575 new stores this year and 450 next year, which will help drive revenue higher. With a solid growth runway and the tailwinds above, the company looks like a good bet to keep moving higher.
