Market Falls on 2025 Final Day; Axsome Surges on FDA Priority Review

On December 31, 2025, major U.S. indices (S&P 500, NASDAQ, Dow) declined by approximately 0.7% [0], marking a broad market pullback on the year’s final trading day. This followed a banner 2025 for stocks, driven by AI optimism, Fed rate cuts, and earnings growth [1]. Concurrently, Axsome Therapeutics saw its market cap grow to $9.1 billion, with its stock surging 22.75% on the day [0]. This surge was triggered by the FDA granting priority review for Axsome’s AXS-05, a drug already demonstrating strong sales growth (69% year-over-year in Q3 2025) [0]. The broader market decline is attributed to light pre-New Year’s trading, profit-taking, and emerging concerns that AI investments may not generate sufficient profits to justify current valuations [1].

1. Axsome’s significant stock surge amid broader market weakness underscores the outsized impact of company-specific catalysts (like FDA regulatory news) on individual stock performance, even in a sideways or declining market.
2. The year-end market pullback signals potential volatility in 2026 as investors reevaluate AI-related investments and their profit potential, contrasting with 2025’s AI-driven rally.
3. Axsome’s AXS-05, already a strong seller, could significantly expand the company’s revenue if approved for Alzheimer’s agitation, addressing its current negative net profit margin (-40.89% [0]).

• Risks
  : For Axsome Therapeutics, the negative net profit margin means approval and successful commercialization of AXS-05 are critical for profitability. The broader market faces risks from AI profit concerns, potential Fed policy shifts, and geopolitical uncertainties.
• Opportunities
  : Axsome stands to gain from expanded revenue if AXS-05 is approved. The broader market may find opportunities if AI companies deliver on profit expectations or economic growth remains robust.

Axsome Therapeutics (AXSM) reached a $9.1 billion market cap, with its stock rising 22.75% on December 31, 2025, due to FDA priority review for AXS-05 in Alzheimer’s agitation. Major U.S. indices declined by ~0.7% on light trading, profit-taking, and AI profit concerns. Axsome’s AXS-05 has shown 69% year-over-year Q3 sales growth, but the company has a negative net profit margin (-40.89% [0]). The broader market’s 2025 gains were driven by AI, Fed rate cuts, and earnings growth, but concerns about AI profits may lead to volatility in 2026.