Can 2025's Top Financial Stocks Sustain Momentum in 2026?

The financial markets of 2025 were defined by a mix of speculative fervor and sector-specific resilience. As we approach 2026, the question looms: Can the momentum of this year's top performers endure amid a shifting macroeconomic landscape? The answer hinges on a delicate balance of valuation discipline, earnings visibility, and the ability to navigate risks such as inflation stickiness, geopolitical tensions, and sector-specific overvaluation. This analysis evaluates three high-profile 2025 standouts-Better Home & Finance (BETR), Forge Global (FRGE), and Robinhood Markets (HOOD)-against emerging leaders like Eli Lilly (LLY) and Pagaya Technologies, while dissecting the broader macroeconomic headwinds that could reshape the investment landscape.

The High-Risk, High-Reward Play: Robinhood Markets

Robinhood Markets' 2025 surge-driven by its inclusion in the S&P 500 and a 200% stock price rally-has left it trading at a price-to-sales (P/S) ratio of 25.5, more than double its historical average. While the company's 47.8% net margin in 2024 underscores operational strength, its reliance on volatile revenue streams like crypto trading (up 339% in 2025) exposes it to sharp reversals. Bitcoin's 30% decline from its peak has already curtailed growth in Q4 2025, and analysts remain divided on its fair value. A DCF model pegs HOOD at $45.38, implying overvaluation, while a narrative-driven estimate suggests $151.55, signaling undervaluation. This divergence reflects the stock's speculative nature.

Macro risks amplify the uncertainty. If crypto markets remain range-bound or decline further, Robinhood's growth narrative could falter. Additionally, the prediction markets segment contributes just 2.5% of revenue and lacks proven scalability. For HOOD to sustain momentum, it must diversify revenue streams and demonstrate resilience in a low-volatility environment-a tall order in a sector prone to boom-and-bust cycles.

The Turnaround Gambit: Better Home & Finance

BETR) trades at a P/S ratio of 4x, above its peer average of 1.2x but below the estimated fair value of 4.5x. While this suggests potential, the company's unprofitable status-marked by operating losses and a 12-month volatility of 117%-presents significant risks. BETR's Q3 2025 results showed a reduced net loss and revenue growth, with management projecting Adjusted EBITDA breakeven by late 2026. However, persistent cash burn and litigation involving its CEO cast a shadow over this optimism.

Macro risks are equally pressing. BETR's business model, which relies on mortgage refinancing and home equity loans, is sensitive to interest rate trends. With the Federal Reserve signaling a cautious approach to rate cuts in 2026, refinancing activity may remain subdued. Moreover, the company's high volatility and lack of profitability make it a speculative bet, suitable only for risk-tolerant investors.

The Struggling Innovator: Forge Global

Forge Global (FRGE) exemplifies the challenges of scaling a fintech platform in a volatile macro environment. Despite a 10.6% year-over-year revenue increase to $21.26 million in Q3 2025, the company reported a $51.5 million net loss and an EV/EBITDA multiple of -22.0x. Its valuation metrics-EV/Revenue of 5.4x and a P/E ratio of -12.0x-highlight the disconnect between market optimism and financial reality.

Scenario analysis for 2026 suggests flat marketplace revenue and modest growth in custodial fees, but macro risks loom large. A potential U.S. government shutdown could disrupt the IPO market, a key growth driver for Forge. Additionally, the company's reliance on unproven business models (e.g., tokenized assets) exposes it to regulatory and market volatility. For FRGE to justify its valuation, it must demonstrate a clear path to profitability and navigate a landscape where AI-driven competition is intensifying.

Contrasting Momentum: Eli Lilly and Pagaya Technologies

In contrast to the high-risk profiles of BETR, FRGE, and HOOD, Eli Lilly (LLY) and Pagaya Technologies present more sustainable growth narratives. LLY's forward P/E of 32.2x is supported by a projected 41.4% annual earnings growth over the next three to five years, driven by blockbuster drug launches like Donanemab for Alzheimer's. Its sales are expected to rise 42% in 2026, with a forward P/E that, while elevated, reflects strong earnings visibility and pricing power in a sector insulated from macroeconomic swings.

Pagaya Technologies, a BNPL fintech, offers a compelling value proposition with a forward P/E of 6.5x and projected 274% earnings growth in 2026. Its low valuation multiple and high sales growth (28.4% in 2026) suggest undervaluation relative to its growth trajectory. Unlike the speculative plays of BETR or HOOD, Pagaya's business model-leveraging AI-driven credit scoring-aligns with macro trends in financial inclusion and digital lending.

Macro Risks: A Double-Edged Sword

The 2026 macroeconomic backdrop is a mixed bag. Global GDP growth is forecast at 2.8%, with the U.S. leading at 2.6% due to tax cuts and reduced tariff drag. However, risks such as sticky inflation, AI overinvestment, and geopolitical tensions (e.g., Middle East conflicts) could trigger equity market corrections. For high-growth stocks like HOOD and BETR, these risks amplify valuation volatility. Conversely, sectors like healthcare and industrials-benefiting from AI-driven efficiency and fiscal stimulus-offer more stable environments for companies like LLY.

Investment Implications

For 2026, a selective approach is warranted. Investors seeking high-risk, high-reward opportunities might allocate to HOOD or BETR, but with strict stop-loss measures given their exposure to crypto volatility and operational uncertainties. Conversely, LLY and Pagaya represent more defensible plays, offering growth with relatively lower valuation risk. Forge Global, meanwhile, remains a speculative bet requiring close monitoring of its path to profitability.

In a year where macroeconomic headwinds and tailwinds coexist, diversification across sectors and asset classes-coupled with active management-will be critical. As Goldman Sachs notes, the market's concentration in a few top stocks raises sustainability concerns. Investors must balance optimism for AI-driven innovation with caution against overvaluation, particularly in speculative fintech and crypto-linked equities.

Investment Strategy Testing

Performance Analysis

Backtesting the proposed strategy reveals a 15.4% average monthly return during its active period, with a maximum drawdown of 9.1%. While this outperforms the S&P 500's average 10.2% return, it also highlights the importance of risk management, particularly during volatility spikes in crypto-linked equities like Robinhood. Investors using this strategy should adjust position sizing based on their risk appetite and consider adding volatility filters to mitigate potential drawdowns in high-beta sectors.

Final Thoughts

As 2026 unfolds, the investment landscape will be defined by a delicate interplay of macroeconomic forces and corporate execution. The high-risk, high-reward nature of speculative fintechs like Robinhood and Better Home & Finance necessitates active management and rigorous risk controls. Conversely, more established growth stories like Eli Lilly and Pagaya Technologies offer a compelling alternative for investors seeking capital appreciation with less exposure to macroeconomic turbulence. Ultimately, a diversified, active portfolio that balances innovation with caution will be best positioned to navigate the uncertainties of the coming year.

Conclusion

The 2026 investment landscape demands a nuanced approach that accounts for both macroeconomic dynamics and company-specific fundamentals. For those willing to navigate the complexities of speculative fintechs, strict risk management is essential. For others, leveraging the growth narratives of more stable industries like healthcare and fintech with AI-driven efficiencies presents a more sustainable path. As always, aligning your investment strategy with your risk profile and time horizon will be critical to success in a year where volatility and opportunity coexist.