New stocks become the new favorite of the market: The U.S. stock IPO sector has averaged a 41% increase this year, significantly outperforming the benchmark index

Stock bulls seeking the next Wall Street hotspot are turning their attention to the busiest corner of the U.S. market this year—the IPO market.

According to Zhitong Finance APP, the stock price performance of newly listed companies has significantly outperformed benchmark indices. In 2025, companies listed on U.S. exchanges (excluding financial vehicles like SPACs) saw a weighted average performance surge by 41%, more than double the gains of the S&P 500 and Nasdaq 100 indices.

Such strong performance is attracting keen interest from banks and asset management firms. Goldman Sachs launched a liquidity IPO basket this month, allowing investors to track a portfolio of companies that have been listed for more than 30 days.

The largest IPOs yield the most substantial returns. IPOs that raised over $1 billion averaged a staggering 77% increase, highlighting investors' preference for size and liquidity. Notable performers include Circle (CRCL.US), which surged 324%, CoreWeave (CRWV.US), which rose over 233%, and Bullish (BLSH.US), which has increased by 83% since its listing.

Will Brautigam, head of U.S. capital markets trading at Deloitte, stated, "The performance of IPOs this year is supported by several factors, but perhaps the most important is that success breeds more success." He cited the positive returns of newly listed companies since 2024, rising retail interest, and the relative maturity of currently listed companies.

So far this year, companies have raised $32 billion on U.S. exchanges, marking a strong rebound after market turmoil caused by tariff-induced uncertainty in April. September alone became the busiest month for IPOs since 2021, as a general rise in the stock market encouraged a wave of issuances.

U.S. IPOs outperform major indices

Stefan Gruffat, global head of equity capital markets syndicate at Deutsche Bank, noted that inflows into equity funds have propelled IPO stocks higher, which is one of a series of macro and micro factors driving strong IPO performance in 2025.

Gruffat pointed out, "Most newly listed companies belong to compelling high-growth, disruptive, and innovative industries." In some cases, the presence of cornerstone investors has also provided support. These so-called cornerstone investors agree to purchase shares during the marketing period before the IPO pricing.

Gruffat mentioned that the initial size and valuation of the offering is another factor. The listing of Circle is just one example; during the marketing process, as the number of shares and price range increased, market enthusiasm also rose. This stablecoin issuer ultimately sold more shares in the IPO, pricing above the already raised range, and this momentum helped drive a 168% surge on the first day.

While crypto tokens and AI-related IPOs have seen the largest gains this year, the market is broadening, with companies from various sectors such as fintech, defense and aerospace, education, and software going public It is certain that most IPO companies will ultimately disappoint in the long run. According to a study released by Nasdaq in 2021, nearly two-thirds of traditional IPO companies that went public between 2010 and 2020 underperformed the market three years after their IPO, with 64% of these companies lagging the market by more than 10 percentage points.

Nevertheless, demand for exchange-traded funds focused on IPOs is regaining traction. The Renaissance IPO ETF and the First Trust US Equity Opportunities ETF have both outperformed the S&P 500 this year, with increases of 16% and 37%, respectively.

However, the inflow of funds into these ETFs is still below pre-pandemic peaks. First Trust's FPX attracted $70 million in 2025, marking a reversal after four consecutive years of outflows, but still below the $145.5 million that flowed in the year before the pandemic. Renaissance's IPO ETF has absorbed $3.6 million so far this year, compared to $586 million in inflows in 2020.

James Seyffart, an ETF analyst at Bloomberg Intelligence, stated: "As IPO-focused ETFs outperform the S&P 500, we expect more funds to flow into these products."