When a leading stock in an industry announces very good news, many of its peers rise by association alone. This was the driving force behind the remarkable stock price gains of a significant number of specialty tech stocks on his penultimate trading day of the week.
Top cybersecurity companies reach positive territory, crowdstrike holdings (CRWD 6.34%) Book a profit of 6% or more on the day, palo alto networks (PANW 2.23%) It rose more than 2% even though Wednesday's earnings release left the market largely uneasy. Cloud computing titles also performed well. cloudflare (Net 4.61%) and data dog (DDOG 4.20%) Both stocks defy gravity by more than 4%.
The king of AI hardware had a strong fourth quarter
These rises came on the heels of a huge shot to the arm. Nvidia's fourth-quarter and full-year 2024 results were released after market hours on Wednesday. Not only did the company report ballooning sales and profitability, it also beat analysts' expectations on both headline numbers.
One of the strongest drivers of Nvidia's growth was (and still is) its data center unit. This segment is responsible for the company's next-generation hardware that enables artificial intelligence (AI) capabilities.
There's little debate in saying that AI is the most exciting development in the technology industry right now. Every high-tech company focused on microchips wants to develop and/or adopt microchips in some way. Meanwhile, clients across many sectors are keen to enhance their businesses by integrating AI into their operations.
It's no surprise, then, that technical experts stepping into the AI swamp and using it to build their futures have benefited greatly in the wake of Nvidia's victory. CrowdStrike, Palo Alto Networks, Cloudflare, and Datadog are all currently working on leveraging AI to invent new ways the technology can benefit you. There is a clear and acute demand for AI capabilities, and each of the four companies is well positioned to capitalize on this.
The future will continue to shine brightly
I like all four of these stocks (similar to how I feel about Nvidia, come to think of it). None of this is a bargain right now, but the potential for AI to power your business is incredible. I would go so far as to say that the potential for each of these companies to increase sales and bottom line profits through technology alone is enormous.
Post-earnings highs tend to disappear relatively quickly, so a correction will occur sooner or later. However, this current revolution is still in its infancy, and there is no doubt that companies can expect even greater benefits in the future if they leverage AI effectively.
Eric Volkman has no position in any stocks mentioned. The Motley Fool has positions in and recommends Cloudflare, CrowdStrike, Datadog, Nvidia, and Palo Alto Networks. The Motley Fool has a disclosure policy.
