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The stock market has given investors plenty of reason to smile, with the S&P 500 rallying by 16% in 2025.
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However, historical headwinds are mounting for Wall Street, with several hot trends at risk of losing their luster.
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Additionally, this is the second priciest stock market in history, dating back 155 years.
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10 stocks we like better than S&P 500 Index ›
For three years, the stock market has provided investors with plenty of reasons to smile. When 2025 came to a close, the benchmark S&P 500 (SNPINDEX: ^GSPC) had climbed by 16%, marking the third consecutive year of gains tallying 15% or greater. This is only the third time in nearly a century that the S&P 500 has risen by at least 15% for three consecutive years.
However, expecting the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500, and Nasdaq Composite (NASDAQINDEX: ^IXIC) to deliver outsize returns for a fourth straight year might be asking too much.
Although Wall Street has been flush with catalysts, headwinds are mounting. When 2026 comes to a close, it’s my prediction that it’ll be looked back on as the “Year of the Bubble,” with up to four potential bubbles threatening to burst.
Even though artificial intelligence (AI) has been the stock market’s most consistent upside catalyst over the last three years, the hottest trend in 2025 was the arrival of quantum computing. With quantum computing, specialized computers are solving complex problems through rapid, simultaneous calculations that classical computers can’t handle.
Since the beginning of October 2024, quantum computing pure-play stocks IonQ (NYSE: IONQ), Rigetti Computing (NASDAQ: RGTI), D-Wave Quantum (NYSE: QBTS), and Quantum Computing Inc. (NASDAQ: QUBT) have rallied by up to 3,080%, through the closing bell on Jan. 8, 2026. However, all four companies are still in the very early stages of commercializing their quantum computers and services.
Most Wall Street analysts believe it’s going to take years before quantum computers can tackle practical problems more cost-efficiently than classical computers. Beyond that, it’ll take additional time before businesses figure out how to optimize quantum computers to maximize their sales and profit potential. In other words, quantum computing isn’t close to being a mature technology.
For high-flying stocks IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc., this means ongoing operating losses and cash burn, the likelihood of share-based dilution to raise capital, and nosebleed price-to-sales (P/S) ratios that can’t be justified. Quantum computing might be the most obvious bubble waiting to burst on Wall Street in the new year.