Q4 S&P 500 Rally: 2 Stocks Poised for Year-End Gains

Since 1950, the fourth quarter has consistently proven to be the most profitable period for S&P 500 investors, delivering average returns of 4.3% compared to just 1.8% in Q1, 2.4% in Q2, and 1.8% in Q3. This pattern isn’t merely statistical—it’s rooted in predictable seasonal factors that create a perfect storm of market optimism. The Christmas holiday shopping surge provides a substantial boost to retail and consumer sectors from November through December, while companies often close out the year with strong earnings reports that fuel investor confidence.

The historical data reveals even more compelling evidence: 70% of Q4 periods since 1928 have ended positively, compared to 65% for other quarters. This pattern held strong in 2024, with the index climbing 5.2% amid technology sector rebounds. The phenomenon also aligns with the expiration of the “sell in May and go away” strategy, where investors who retreated during summer months return to markets in October, driving capital inflows and increased demand. In election years like 2024, Q4 volatility can add further upside as policy clarity emerges, while government shutdowns have historically preceded 12-month stock gains averaging 17%.

For 2025, analysts expect similar momentum, supported by cooling inflation and potential rate cuts that could set the stage for broad market advances. This combination of historical precedent and current economic conditions makes Q4 a particularly attractive window for portfolio repositioning and strategic investments.

Vertiv Holdings has emerged as a standout performer in 2024, with shares climbing over 42% year-to-date on the back of explosive demand for AI infrastructure. The company provides critical power and thermal management solutions for data centers, positioning it at the epicenter of the artificial intelligence revolution. As hyperscalers like Microsoft and Google expand their AI clusters, the need for reliable, efficient infrastructure has intensified, driving demand for Vertiv’s uninterruptible power supplies and liquid cooling systems.

The company’s financial performance underscores this momentum. Second quarter revenues reached $2.07 billion, representing a 24% year-over-year increase, while net income jumped an impressive 120% to $185.8 million. Orders grew 18%, signaling sustained backlog that should carry into Q4. Despite supply chain challenges, Vertiv’s partnerships with Nvidia for AI-optimized cooling help mitigate risks while capitalizing on the white-hot data center demand.

Wall Street maintains a consensus “Buy” rating on VRT stock, though current price targets present a mixed picture. Analysts’ average target of $145 per share suggests some concern about valuation at current levels around $161, while Goldman Sachs recently set a more optimistic target of $159. With global data center capital expenditures from tech giants projected to reach approximately $350 billion in 2025, and upcoming Q3 earnings that could easily beat both internal estimates and analyst expectations of 25% revenue growth, Vertiv appears well-positioned to capture Q4’s tech tailwinds.

Arm Holdings represents another compelling Q4 opportunity, though its recent performance has been more nuanced. The designer of energy-efficient processor architectures, which powers 95% of premium smartphones, is aggressively expanding into AI and automotive chips. Its American Depositary Receipts have gained 23% in 2025 so far, driven by licensing deals with Qualcomm and Apple, yet the company faces significant challenges that create both risk and opportunity.

Fiscal first-quarter results revealed concerning trends beneath the surface revenue growth. While revenue increased 12% to $1.02 billion—marking the second straight quarter above the billion-dollar threshold—profits tumbled 42% to $130 million. More worrying to investors was guidance for Q2, which indicated revenue would be down or slightly up sequentially. Additionally, analysts have expressed concern about Arm’s plan to begin designing its own chips, a strategic shift that carries execution risk but could open substantial new revenue possibilities beyond the current royalty and licensing model.

Despite these challenges, analysts maintain a consensus “Buy” rating with a $168 per share price target, suggesting approximately 10% upside from current $156 levels. Key catalysts include royalties from new iPhone launches and PC chip transitions via clients like MediaTek. With a total addressable market exceeding $200 billion spanning cloud servers to edge devices, and recent Qualcomm integration validating its ecosystem lock-in, Arm stands to benefit significantly as AI shifts toward edge computing. While breaking into the competitive chip market carries risk, the potential payoff makes ARM stock a prime pick for Q4’s semiconductor advance.