Rolls-Royce (LSE: RR) shares show no sign of slowing down as we move towards 2025. Indeed, the FTSE 100 stock remains the best-performing large-cap across Europe since the end of 2022!

In recent days, it’s been flirting with 600p, which would represent a doubling in 2024 alone.

However, Rolls did reach a new milestone this week. Its market valuation reached £50bn for the first time.

This puts the engineering powerhouse just outside the top 10 largest listed firms in the UK (it’s currently 12th, behind spirits giant Diageo).

Mind you, Rolls-Royce remains a relative tiddler compared to many US-listed companies. A market cap of £50bn would make it just the 147th largest across the pond.

On track

We haven’t had any major news since the trading update last month. In this, the firm said it expects to deliver full-year underlying operating profit of £2.1bn to £2.3bn and free cash flow between £2.1bn and £2.2bn.

Over the 10 months to 31 October, large engine flying hours grew 18% year on year to 102% of 2019 levels. For the full year, management expects this figure to be 100-110% of pre-pandemic levels.

This metric is important as it indicates a rebound in global air travel, a key driver of Rolls-Royce’s revenue from servicing large aircraft engines.

Meanwhile, demand remained strong in its Defence division, while the Power Systems business has been enjoying a boost from growing data centre demand for back-up systems.

We’re living through a powerful digital revolution, including the rise of artificial intelligence (AI). So it’s positive that Rolls-Royce is getting a bit of exposure to the strong growth in data centres.

Supply chain headaches

As for risks, we were warned again in the trading update about supply chain issues across the aerospace industry.

These include shortages of skilled labour and critical components, as well as disruptions from geopolitical tensions. All this is leading to production delays and increased costs for manufacturers.

While the company is taking steps to mitigate these issues, they’re certainly throwing a few spanners in the works.

Microreactors

Returning to the data centre theme, all the big tech giants have been looking to nuclear power to meet the skyrocketing energy needs created by AI systems. Nuclear stocks have been surging in response.

The Financial Times reported a couple of weeks ago that Rolls was in early-stage talks with potential customers for its compact nuclear reactors. Due to their small size, they’re easily transportable.

These may help power data centres in future, as well as remote mining projects. The firm even reckons they could be strapped to a rocket and sent into space to support a future Moon base for astronauts!

Pair these with the small modular reactors (SMRs), which increasingly look set for deployment in the 2030s, and Rolls-Royce has the potential to build a very large nuclear technology division in future.

Santa rally is real

Will we see shares start the New Year above 600p? It’s entirely possible, at least if history is anything to go by.

That’s because the ‘Santa rally’ isn’t just market mythology, according to eToro. Its research found that the FTSE 100 does historically outperform in December, beating its average monthly performance by 1.93%!

Either way, I plan to hold my Rolls-Royce shares into 2025 and beyond.