Seeking Alpha’s Top Tech ‘Buys’

Tech stocks had a blistering 2024, fueled by generative artificial intelligence (AI). However, 2025 has been a bit of a damp squib so far.

According to Seeking Alpha, by mid-January technology was the worst performer of the S&P 500’s 11 sectors. This is not to say there are no opportunities, however.

The publication has identified 10 US tech companies that it deems to be particularly attractive. 

It used a quant analysis system to grade stocks on their growth, profitability, value and other metrics. The only requirement was they had to have a market cap of at least $10bn. Each stock has been graded out of five, with one indicating a strong ‘sell’ and five indicating a strong ‘buy’. 

Here, OPTO dives into three of the 10 picks, unpacking why they could deliver a strong performance in 2025. 

Cloudflare 

The Cybersecurity Play

Source: Stockanalysis.com

Fifth on Seeking Alpha’s list is Cloudflare [NET]. The cyber security firm plays a critical role in helping the US to protect its infrastructure and was hired by the Trump and Harris campaigns during the run up to the election. 

Cloudflare is expected to bring in $2.10bn in revenue in 2025, according to Yahoo Finance, up from the company’s own full-year guidance for 2024 of $1.66bn.

Wells Fargo has named Cloudflare as a top pick for the year ahead. It is “well positioned to consistently outperform revenue expectations throughout 2025, while modestly expanding operating and free cash flow margin”.

The brokerage hiked its price target for NET stock from $110 to $135, which implies an upside of 12.27% from the most recent closing price of $120.25. 

Cloudflare’s Zero Trust/SASE product, which accounts for two-thirds of new bookings, “stands out in a rapidly growing market forecasted to reach $25bn by 2027,” Wells Fargo analysts wrote in a note to clients last week. The company should continue to grow its market share. 

Its Workers AI platform, which allows customers to run machine learning models on the Cloudflare network from their own code, is also “underappreciated,” they added. 

One Reason to Be Cautious on NET Stock

Analysts are forecasting revenue to grow 28.15% this year. This rate might not be high enough to justify its current P/S ratio, especially when you consider that the growth rate has been slowing in recent quarters. 

Twilio 

The Cloud Communication Play

Source: Stockanalysis.com

Ranked fourth on the list, cloud communication platform Twilio [TWLO] has been expanding into AI.

At the end of 2024, the company introduced OpenAI’s Realtime API to its platform. The API enables natural speech-to-speech interactions, allowing developers to have conversations with GPT-4o. 

TD Cowen analyst Derrick Wood raised his price target for TWLO stock from $85 to $120 last week, which implies an upside of 6.36% from the most recent closing price of $112.82.

Twilio was due to hold an analyst day on January 23 and Wood expected plenty of updates around product innovation, along with commentary on opportunities in agentic AI, which is where systems can make decisions autonomously.

“We also expect management to provide more detailed fiscal 2025 and medium-term [guidance], alongside preliminary Q4 color, which we expect to be strong,” wrote Wood. 

One Reason to be Cautious on TWLO Stock

Twilio is yet to report a quarterly net profit, which means the stock could be considered expensive relative to its fundamentals. The company said last March that it hopes to break even in Q2 2025. 

Taiwan Semiconductor Manufacturing Co 

The Semiconductor Play

Source: Stockanalysis.com

The third-highest on the list is TSMC [TSM]. 

The world’s leading contract chipmaker has been a major beneficiary of the demand for AI chips. Customers include Apple [AAPL], Broadcom [AVGO], Nvidia [NVDA] and Qualcomm [QCOM].

TSMC reported record quarterly profit on January 16 for the three months to December 31. And, while it expects its business to be affected by “smartphone seasonality”, this will be “partially offset by continued growth in AI-related demand” in Q1 2025, said CFO Wendell Huang on the Q4 2024 earnings call.

AI revenue is expected to double this year, having tripled in 2024. “Customers rely on TSMC to provide the most advanced process and packaging technologies at scale,” added CEO C.C. Wei. 

Following the earnings release, several analysts upgraded their ratings and price targets for the stock.

Goldman Sachs reiterated a ‘conviction buy’ rating, noting TSMC’s “bullish stance towards AI” and the company’s confidence that it is able to manage the risks stemming from “potential shipment restriction to mainland China”. 

One Reason to Be Cautious on TSM Stock

There is uncertainty around the tariffs President Donald Trump might impose on chipmakers, particularly those manufactured in Taiwan. CEO Wei expects the issue to be manageable, however.