When investors think about the biggest winners of 2025, artificial intelligence stocks inevitably come to mind. But in a twist that caught even seasoned market watchers off guard, it was the often-overlooked clean energy sector that delivered some of the year's most impressive returns.

The Numbers Don't Lie

The iShares Global Clean Energy ETF (ICLN) returned an eye-popping 46% year to date, handily outpacing the tech-heavy Nasdaq Composite's 20% gain. Perhaps even more surprisingly, clean energy stocks left Nvidia—the undisputed AI darling—in the dust, with the chipmaker gaining 38% over the same period.

This performance marks a stunning reversal for a sector that had been written off by many investors. After years of underperformance and skepticism about the viability of renewable energy investments, 2025 became the year that clean energy proved its doubters wrong.

The Policy Catalyst Nobody Expected

The rally's unlikely origins trace back to legislation that was never intended to boost the sector. President Trump's megabill, which aimed to roll back clean energy incentives, included a critical deadline: companies had to begin renewable energy projects by July 2026 or lose valuable tax credits entirely.

Rather than killing the industry, this provision sparked a national race to break ground on solar farms, wind turbines, and battery storage facilities. Bloomberg New Energy Finance responded by raising its forecast for power generation from these projects by 10%.

"The unintended consequence of setting a hard deadline was creating urgency that accelerated investment rather than deterring it."

— Bloomberg New Energy Finance analysis

Individual Stock Performances Were Even More Remarkable

While the sector as a whole delivered impressive returns, individual clean energy stocks posted gains that rivaled even the hottest AI names:

  • Sunrun (RUN) surged 96% year to date, with a remarkable 115% gain in the fourth quarter alone. The residential solar installer benefited from homeowners rushing to lock in tax credits before the deadline.
  • First Solar (FSLR) continued its multi-year run, capitalizing on its domestic manufacturing advantage as tariffs on Chinese solar panels remained in place.
  • Constellation Energy (CEG) expanded its position as America's largest carbon-free energy producer, completing its $26.6 billion acquisition of Calpine.

Global Tailwinds Provided Additional Support

The domestic policy catalyst was amplified by powerful global trends. According to the International Energy Agency's midyear update, renewables are now poised to surpass coal-fired generation "either as early as 2025 or in 2026." Coal's share in total generation is set to drop below 33% for the first time in a century.

The numbers tell a dramatic story of transformation:

  • Solar and wind combined now account for 17% of global electricity generation, up from 15% in 2024
  • In July, solar became the European Union's single biggest source of power
  • In the first half of 2025, China installed more solar capacity than the rest of the world combined
  • Global clean tech investment hit $1.8 trillion in 2025, up 15% year-over-year

The Energy Grid Is Being Rebuilt

The Energy Information Administration projects that renewable energy and batteries will make up 93% of the capacity added to America's power grid this year. This isn't a gradual transition—it's a wholesale transformation of how the country generates electricity.

NextEra Energy, the largest producer of wind and solar power in North America, now operates 76 gigawatts of renewable energy capacity. To put that in perspective, that's enough to power roughly 57 million homes.

What This Means for 2026

The question investors now face is whether clean energy's remarkable run can continue. The July 2026 deadline that sparked this year's rally will continue to drive project development through at least the first half of next year.

But beyond the policy-driven surge, the fundamental economics of renewable energy have shifted decisively. Solar and wind are now the cheapest forms of new electricity generation in most of the world, providing a durable competitive advantage that will persist regardless of policy changes.

For investors who dismissed clean energy as a political trade, 2025 delivered a powerful reminder: sometimes the biggest opportunities are hiding in plain sight, in sectors that the crowd has given up on.