Tech Stocks Rally as AI Drives Growth in Nasdaq

Tech stocks flourish as AI sparks Nasdaq rally. Companies like Alphabet, SentinelOne, and Taiwan Semiconductor lead the charge, making them attractive investment options.

Date: 23-02-2025

AI Rating: 7

The report highlights the significant impact of artificial intelligence (AI) on the tech sector, notably the Nasdaq Composite nearing all-time highs. High-growth industries like AI, cloud computing, and semiconductors are being touted as exceptional investment opportunities in this environment.

Earnings Per Share (EPS): While specific EPS figures are not explicitly mentioned, the report indicates that Alphabet is projected to see earnings growth of over 16% annually. This suggests a solid EPS growth outlook in the future.

Free Cash Flow (FCF): Alphabet's free cash flow generated in 2024 was impressive, totaling over $72 billion net of capital investments. This strong FCF supports Alphabet's ability to invest in AI data centers, highlighting its financial strength.

Revenue Growth: Alphabet's ad business, a key component of its revenue, grew more than 10% in 2024. Similarly, SentinelOne's revenue growth is noted to be competitive with its peers. For Taiwan Semiconductor, while specific revenue figures aren't detailed, it is indicated that the company is expected to grow earnings by an average of 33% annually, which typically aligns with revenue growth.

Operating Margins: SentinelOne is mentioned as improving its operating margins, which can enhance profitability moving forward. This is crucial as margins reflect operational efficiency and profitability potential.

Geopolitical Risks: Taiwan Semiconductor has notable geopolitical risks due to its location in Taiwan. While it is taking steps to manage these risks, investors should be aware that these factors could affect stock performance and overall risk assessment. However, its dominant position in the market makes it an attractive investment despite these concerns.

Stocks: GOOGL S TSM