Tech is Down, But Not Out

Tech stocks have had a rough 2025 so far.

The NASDAQ Index, home to the largest tech stocks, is down around 7.5% for the year.

Comparing the NASDAQ to SPXT, an ETF of the S&P 500 excluding tech which only lost 2.5%, highlights how badly tech stocks have performed.

However, tech stocks rebounded with the NASDAQ rising almost 8% last week.

What caused the jump in tech stocks?

It was the start of earnings season and some tech stocks really stood out.

First up was Tesla (ticker: TSLA), which released earnings last Tuesday.

Tesla’s earnings were bad as the company reported a 20% decline in revenue.

But you just said tech did well last week!

The market shrugged off the poor quarter because of more important news about Tesla.

Tesla’s CEO, Elon Musk, confirmed he’ll be stepping back from his government role and focusing more attention on Tesla.

Musk's work with the Trump administration is one reason for Tesla's declining share price...

Not to mention the CEO actually needs to be running the company full-time!

Tesla shares were up over 20% last week as a result of the news.

Next up was ServiceNow (ticker: NOW), which released earnings last Wednesday.

ServiceNow, a cloud computing software company, had almost $11 billion in revenue in 2024.

ServiceNow beat earnings estimates and raised their expectations for the rest of the year.

Their stock price went up 25% last week!

Given the uncertainty surrounding tariffs, concerns arose about how trade issues would impact companies like ServiceNow.

When recessions hit, one of the first areas businesses cut back on is their information technology budget.

So ServiceNow’s optimism about the rest of 2025 is a glimmer of hope we might avoid a recession.

Last, and certainly not least, Alphabet (ticker: GOOG), the parent company of Google, released earnings on Thursday.

They completely blew away earnings by reporting an almost 50% increase in their income.

Alphabet’s stock was up almost 9% last week from the amazing quarter!

Most importantly, Alphabet reported an 8.5% increase in advertising revenue.

Similar to spending on information technology, companies cut back on advertising if they fear an economic downturn.

The earnings releases for these companies have been great, but don’t forget the bigger picture.

Management at these companies are optimistic about the future.

Contrast their optimism with more than 60% of surveyed CEOs forecasting a recession in the next 6 months.

The last few months have been rough for tech stocks because of tables like the one above.

But management at some of these huge tech companies aren’t as worried and expect better results for the rest of 2025.

Now might be the perfect time to start buying technology stocks again!

Would you buy?

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