The first month of January saw a rout in tech stocks, with the Technology Select Sector SPDR Fund (XLK) down 2% year-to-date. Investors were caught off guard on Jan. 27 by the launch of a new free AI assistant from the Chinese startup DeepSeek. The model demonstrated logic and reasoning capabilities on par with market leader ChatGPT, at a fraction of the training and development cost.
Nvidia Corp (NVDA) was hit particularly hard, shedding nearly $600 billion in market cap amid reports that DeepSeek’s model required significantly less graphical processing power to train. While the full impact of the tech sector’s sell-off remains uncertain, it’s clear the AI landscape has been disrupted by DeepSeek’s entry.
Below is an analysis of the top tech stocks for February 2025, screened for best value, fastest growth, and most momentum. All stocks are listed on the Nasdaq or New York Stock Exchange. We excluded stocks with a price under $5, an average daily trading volume of less than 100,000, and a market cap of less than $300 million.
All data are current as of Feb. 3, 2025.
Best-Value Tech Stocks
Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing. Investors often use price-to-earnings (P/E) ratio, looking for stocks with a low P/E ratio to uncover value. Typically, a lower P/E ratio signals an undervalued stock because it means the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts.
However, bargain hunters must exercise patience, as it may take multiple quarters (or years) before a turnaround materializes. Some stocks may also remain cheap for a reason, falling into a “value
trap,” continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value
opportunity.
| Best-Value Tech Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization ($B) | 12-Month Trailing P/E Ratio | |
| Yiren Digital Ltd. (YRD) | 5.51 | 0.5 | 1.9 |
| i3 Verticals, Inc. (IIIV) | 24.97 | 0.84 | 5.3 |
| Weibo Corporation (WB) | 10.06 | 2.4 | 7.0 |
- Yiren Digital Ltd: A fintech company based in China, Yiren Digital operates a financial marketplace connecting investors with borrowers. The company offers payment processing, loan services, insurance products, and ecommerce products. Yiren Digital reported a stable third quarter of 2024, with total revenue up 13% year-over-year. Overall, the company continues to ramp up its AI initiatives, deploying new technologies to increase operational efficiency.
- i3 Verticals, Inc: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. On Dec. 19, i3 Verticals announced the signing of a partnership contract with Saskatchewan Province to provide motor carrier registration services, increasing its public sector presence in Canada.
- Weibo Corporation: Weibo Corporation is a leading social media platform in China. The company generates revenue primarily from advertising and marketing, as well as premium user services. As of September 2024, it had 587 million monthly active users.
Fastest-Growing Tech Stocks
Growth investors look for companies with increasing revenue and earnings per share (EPS), believing these metrics signal strong business fundamentals and potential for value
appreciation. However, relying on just one of these indicators can present an incomplete picture, as factors like tax law changes, mergers, or one-time gains can distort the numbers.
While growth investing offers the potential for high returns, it also comes with risks, such as inflated valuations, market volatility, and companies failing to sustain rapid expansion. Investors should
be cautious of excessive hype, unsustainable growth rates, and external economic factors that could impact performance. For a more balanced assessment, we employ a dual-metric approach. We equally weight the most recent year-over-year (YOY) percentage growth in both revenue and earnings per share (EPS), giving each consideration to provide a clearer view of each company’s true growth trajectory. In addition, we exclude companies that exhibit extraordinarily high growth rates—specifically, those with quarterly growth exceeding 1,000%—since these are outliers not likely on a sustainable trendline.
| Fastest-Growing Tech Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Sportradar Group AG (SRAD) | 20.78 | 6.2 | 795 | 28 |
| ODDITY Tech Ltd (ODD) | 47.43 | 2.7 | 323 | 26 |
| Applovin Corporation (APP) | 365.44 | 122.6 | 313 | 39 |
- Sportradar Group AG: Sportradar Group AG is a global sports technology company that provides data analytics, betting solutions, and media services to sports organizations, media outlets, and sportsbooks. Its core businesses include real-time sports data collection, AI-driven betting and gaming solutions, fan engagement tools, and integrity services that monitor and prevent match-fixing.
- ODDITY Tech Ltd: ODDITY is a consumer tech company leveraging AI and data science to create digital-first beauty and wellness brands, disrupting traditional offline markets. The company currently boasts 50 million users and recently announced the acquisition of the intellectual property and research team of AI fintech company Fionic.
- Applovin Corporation.: AppLovin is an advertising company that helps businesses reach and monetize audiences through its software platform and mobile gaming portfolio. The company operates two segments: Its Software Platform earns revenue by matching advertisers with publishers in real-time auctions, and its Apps business generates revenue through in-app purchases and in-app advertising on free-to-play mobile games.
Tech Stocks With the Most Momentum
Momentum investing is a strategy that seeks to capitalize on existing market trends by investing in stocks that have recently outperformed their peers or the broader market. The core idea is that stocks on an upward trajectory are likely to continue rising as long as the fundamental drivers
behind their growth remain intact.
This strategy is particularly popular in the tech sector, where innovation, product launches, and market disruptions often lead to rapid stock price appreciation. However, investors must carefully monitor stock valuations, as fast-rising stocks often outpace their fundamentals. When valuations become overstretched, they can form speculative bubbles that are vulnerable to sharp selloffs if market sentiment shifts. Here are the tech stocks with the highest total return in the last 12 months.
| Tech Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Red Cat Holdings, Inc. (RCAT) | 8.82 | 0.71 | 1,226 |
| Quantum Computing, Inc. (QUBT) | 9.95 | 1.36 | 1,176 |
| Exodus Movement, Inc. (EXOD) | 59.6 | 1.6 | 983 |
- Red Cat Holdings, Inc: Red Cat is a drone technology company specializing in integrating robotic hardware and software for military, government, and commercial applications. Owing to strong demand for its military drones, Red Cat guided 2025 revenues in the range of $80 million to $120 million, up from $17.8 million in fiscal 2024.
- Quantum Computing, Inc.: Quantum Computing is an integrated photonics and quantum technology company focused on developing accessible and affordable quantum computing solutions. While there is controversy around the commercial viability of quantum computers, the company has secured significant partnerships, including with NASA, for applications in space missions.
- Exodus Movement, Inc.: Exodus is a financial technology company that provides secure, user-friendly self-custodial cryptocurrency wallets, allowing users to manage, swap, buy, and sell digital assets.
Advantages of Tech Stocks
Growth Potential
Tech companies, especially those in emerging sectors like artificial intelligence, cloud computing, and cybersecurity, often experience rapid revenue and earnings growth. Many tech firms have scalable business models that allow them to expand globally, while maintaining high gross margins.
Innovation
The tech industry is constantly evolving, with companies pioneering groundbreaking innovations that reshape entire industries. Investors in leading tech firms can benefit from major technological shifts, such as AI, and automation, creating long-lasting competitive advantages.
Recurring Revenues
Many tech companies, particularly those in software, cloud computing, and digital services, operate on subscription-based or recurring revenue models, ensuring more stable and predictable cash flows. These models provide businesses with greater revenue visibility, reduce dependence on one-time sales, and enhance customer retention through long-term contracts and service integrations. Additionally, recurring revenue helps mitigate economic downturns by offering consistent income streams, while also enabling companies to reinvest in research, development, and expansion
Disadvantages of Tech Stocks
Volatility
Tech stocks are known for their high volatility because rapid technological changes and competitive pressures can lead to significant price fluctuations. They often carry high valuations based on growth expectations, making them susceptible to market corrections if they fail to meet these
projections. Furthermore, regulatory challenges and geopolitical tensions can impact the sector, introducing additional risks and uncertainties for investors.
Valuation Risks
Owing to their high growth potential, many tech companies trade at high earnings or revenue multiples, making them susceptible to overvaluation. If growth expectations do not materialize, these stocks can experience sharp declines, leading to potential losses for investors. Moreover,
early-stage tech companies often allocate a significant portion of their capital to staffing and marketing to sustain their high growth rates. As a result, they tend to remain unprofitable in their initial stages, often relying on outside capital to fund expansion, despite achieving higher gross margins than companies in non-technology sectors.
Regulatory and Competitive Challenges
The tech industry faces increasing scrutiny from regulators on issues like data privacy,
antitrust concerns, and cybersecurity. Tech giants such as Meta Platforms (META)
and Alphabet Inc (GOOGL) are no strangers to regulatory probes and fines. Additionally, competition is fierce, with companies constantly innovating to maintain their market position, which can erode profitability and market share over time.
The Bottom Line
Tech stocks offer compelling investment opportunities due to their high growth potential, continuous innovation, and recurring revenue models, making them a dominant force in the global economy. AI is set to be a major driver of technological advancements in 2025, with the potential to
disrupt all major industries. However, the sector can be volatile, with regulatory scrutiny expected to increase along with innovation. Investors should exercise caution, ensuring that even the most promising tech stocks are evaluated critically to avoid getting caught up in market bubbles or
speculative hype.
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As of the date this article was written, the author does not own any of the above securities.
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