The technology sector saw growth in the second quarter of 2025, driven by strong adoption of Artificial Intelligence (AI) and machine learning, as well as Generative AI (GenAI).
The sector is riding on the ongoing digitalization wave. The rapid adoption of AI, cloud computing, 5G, the Internet of Things, wearables, headsets supporting augmented and virtual reality technologies, drones, robotics, cybersecurity, blockchain and quantum computing is expected to have aided sector participants.
A number of technology companies are set to report their earnings results over the next couple of weeks. We have picked four technology stocks — Meta Platforms (META – Free Report) , Lam Research (LRCX – Free Report) , Flex (FLEX – Free Report) and Seagate Technology (STX – Free Report) — which are well-poised to beat earnings estimates this season.
Technology Stocks Riding on AI Boom, Investments
AI demand is escalating, and that has increased the need for data center capacity expansion. Leading cloud computing providers like Amazon, Alphabet, Microsoft and Meta Platforms have multi-year investment plans to support greater cloud capacity and AI deployment. While Microsoft plans to spend $80 billion, Meta Platforms plans to spend $64-$72 billion on AI-related infrastructure development.
The advent of GenAI has further attracted investments. Large Language Models, which form the backbone of GenAI, require significant computational power to process massive amounts of data. This requires massive investment in chips, particularly graphics processing units (GPUs), and energy. Per the Semiconductor Industry Association data, semiconductor sales in May 2024 were $59 billion, up 19.8% year over year and 3.5% month-over-month. In April, sales were $57 billion, up 2.5% month over month.
Moreover, the PC segment witnessed growth in the second quarter of 2025. IDC estimates 68.4 million sold units, up 6.5% year over year. In contrast, Gartner estimates shipments of 63.2 million units, up 4.4% year over year. PC shipment is expected to benefit from the ongoing upgrade cycle as support for Windows 10 ends in October 2025 and growing demand for AI-enabled PCs.
How to Pick Earnings Estimates Beating Stocks?
Finding technology stocks with the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
Menlo Park, CA-based Meta Platforms has an Earnings ESP of +1.83% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meta Platforms’ focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user engagement. This is expected to boost second-quarter 2025 ad revenues, which, per the Zacks Consensus Estimate, is pegged at $43.94 billion, suggesting 14.6% year-over-year growth. The social-media giant is set to report on second-quarter 2025 on July 30, 2025.
The Zacks Consensus Estimate for earnings has increased four cents to $5.80 per share over the past month and suggests 12.4% growth over the figure reported in the year-ago quarter.
Fremont, CA-based Lam Research currently has an Earnings ESP of +2.71% and a Zacks Rank #2. The company is scheduled to report fourth-quarter fiscal 2025 results on July 30.
Lam Research is benefiting from ongoing shifts in semiconductor demand, particularly around AI and data center chips. These advanced chips require complex manufacturing, and Lam Research provides the essential tools, like deposition and etching systems, needed to build them. Lam Research’s Systems revenues accounted for 64.3% in third-quarter fiscal 2025, and the consensus mark is pegged at $3.22 billion, indicating 48.5% year-over-year growth.
The Zacks Consensus Estimate for earnings has been steady $1.20 per share over the past month and suggests 48.15% growth over the figure reported in the year-ago quarter.
Singapore-based Flex Ltd is set to report first-quarter fiscal 2026 results on July 24. The company has an Earnings ESP of +2.77% and a Zacks Rank of 2.
Flex’s to-be-reported quarter is expected to reflect an expanding IP portfolio, recent design wins, acquisitions and strong demand in data center, networking and automotive power electronics markets. Flex continues to benefit from its extensive global footprint of more than 48 million square feet across 110+ sites, enabling efficient, high-scale manufacturing. The Zacks Consensus Estimate for Agility Solutions is pegged at $3.52 billion, indicating 4.5% year-over-year growth.
The consensus estimate for fiscal first-quarter earnings has been steady at 63 cents per share over the past 30 days and indicates 23.53% growth over the figure reported in the year-ago quarter.
Dublin, Ireland-based Seagate Technology is scheduled to report its fourth-quarter fiscal 2025 results on July 29. The company has an Earnings ESP of +2.34% and a Zacks Rank #2.
Continued momentum in mass capacity revenues, driven by robust nearline cloud demand, propels the growth trajectory for Seagate. Nearline cloud revenues and exabyte shipments are riding on a favorable demand environment amid supply constraints and AI-driven cloud expansion. This bodes well for Seagate’s to-be-reported quarter. The Zacks Consensus Estimate for Mass Capacity revenues is pegged at $2 billion, suggesting 39.6% year-over-year growth.
The consensus mark for earnings has inched up by a penny to $2.46 per share over the past month and suggests 134.29% growth over the figure reported in the year-ago quarter.
