Tech Earnings
Tech earnings season is in full swing, and that’s great news for readers.
Results have been highly positive so far, and I fully expect tech firms ($COMPQ) to jump over the bar.
Let’s get real – the stakes are high because stocks are expensive.
It’s never been harder to move the needle because of the sheer numbers we are dealing with.
If tech stocks falter, the downside is treacherous and unforgiving.
Let’s hope we avoid and worst-case scenarios.
Corporate America and the U.S. consumer are also leveraged to the hills, and investors are going for broke to make that extra bit of alpha in a quasi-stagflationary environment.
At the blue-blood end of the technology stocks, management is telling us that all systems are go.
63% of the S&P 500 companies have beaten earnings expectations by at least 1 standard deviation, the highest percentage in 4 years.
Excluding the post-pandemic recovery, this marks the best quarter in at least 25 years.
By comparison, the long-term average has been 48%.
At the same time, just 10% of firms have missed estimates by at least 1 standard deviation, the lowest share in a year and below the long-term average of 13%.
The sector’s performance was underpinned by robust demand for artificial intelligence (AI), cloud computing, and semiconductor technologies, which have been key growth drivers in recent years.
The ongoing AI revolution has been a major catalyst for technology stocks. Companies like NVIDIA, the dominant supplier of GPUs for AI applications, reported jaw-dropping revenue of $35 billion in Q3 2024, reflecting the insatiable demand for AI infrastructure.
This trend likely persisted into Q3 2025, as companies across the AI landscape, including Alphabet and Advanced Micro Devices (AMD), continued to show strong momentum.
Alphabet’s Q2 2025 earnings reported 32% year-over-year cloud revenue growth, driven by AI investments, and NVIDIA’s sustained dominance suggests the AI tailwind remained strong.
The technology sector’s strong Q3 2025 performance was driven by AI and cloud computing demand, resilient consumer spending, and frequent earnings beats, with firms like NVIDIA, Palantir, and AMD leading the charge.
The sector’s fundamentals, supported by AI and cost-cutting, made Q3 2025 a standout, reinforcing tech’s role as a market leader. Investors should remain cautious of high valuations and tariff-related risks while capitalizing on AI-driven opportunities
Advanced Micro Devices (AMD) exemplifies the strength of technology stocks right now, driven by robust growth and a solid balance sheet, reflecting broader sector trends.
AMD’s performance serves as a microcosm of the tech industry’s resilience, particularly in AI and semiconductors, fueled by innovation, demand, and financial stability.
AMD’s total quarterly revenue is up 18% year-over-year, highlighted by AMD’s AI chip advancements, with the MI350X price raised 40% to compete with NVIDIA’s Blackwell, boosting 2025 AI revenue forecasts from $9.6 billion to $15.1 billion.
I can’t reiterate enough that in the short-term, a tech company is missing out on the AI boom; there is no reason to dip into these types of stocks.
The reason why stocks in the tech sector are rising is precisely because of the AI narrative and nothing else.
The sector has tied the trajectory of its stocks to this burgeoning technology, and if it fails, we will suffer a massive sell-off.
Keep investing in AI names and be the first to bail when cracks form around the foundations.
