3 Tech and AI Stocks That Just Blew the Cover Off of Earnings

With earnings season now in full swing, investors and analysts are carefully monitoring the results, particularly on high-flying tech and artificial intelligence stocks trading at rich valuations and after the emergence of DeepSeek, which rocked the sector.

Most publicly traded companies report their financial results every three months to update investors on how much money they made and on the current state of their balance sheets. Many companies will also provide financial guidance for the upcoming quarters or year so the market has some idea of how things will progress.

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Earnings and guidance are extremely important, because investors and analysts use these figures to make projections and value stocks. Strong earnings and guidance typically lead to positive movements for the associated stocks. Here are three tech and AI companies that just blew the cover off of earnings.

Netflix: Strong subscriber growth

The popular streaming service Netflix (NASDAQ: NFLX) continues to impress, recording strong subscriber growth in what many analysts and investors see as a saturated streaming market. Paid subscriptions rose by nearly 19 million in the fourth quarter when the Street modeled only 8.2 million. Earnings and revenue also posted nice beats.

During the fourth quarter, Netflix streamed several big live events, including two NFL Christmas Day games and the highly anticipated boxing match between Jake Paul and Mike Tyson. Those events each brought in tens of millions of viewers. Perhaps even more impressive is that management said viewers that came to the platform for those events remained on the platform, and also that the growth could be attributed to a variety of content across the platform.

Management also increased its projected revenue range in 2025 by about $500 million to a range of $43.5 billion to $44.5 billion, while also announcing a $15 billion share repurchase plan. Netflix also raised the price on its subscriptions. The company is increasing its basic ad-supported plan by $1 to $7.99 per month, its first ad-free plan by $2.50 to $17.99 per month, and its premium subscription by $2 to $24.99 per month.

Jefferies analyst James Heaney called the results "near flawless." Macquarie analyst Tim Nollen also opined on the results: "With no more sub reporting to come, investor focus shifts to Netflix's ability to monetize its member base; advertising and price increases help answer this."

GE Aerospace: Thriving since the split

GE Aerospace (NYSE: GE), the company's main business after spinning off its other divisions, enjoyed nice gains after reporting strong earnings for the fourth quarter. The company beat analyst estimates on revenue, earnings, and operating profits:

• Earnings per share (EPS) of $1.32, $0.28 ahead of consensus estimates
• $9.9 billion in revenue, $400 million ahead of consensus
• Operating profit of $1.9 billion, $200 million ahead of estimates.

Guidance also came in as expected with the midpoint of expected EPS and free-cash-flow guidance actually coming in ahead of estimates. Analysts praised the results, saying that GE came into the quarter with pretty high expectations. GE's decision to spin off its healthcare and energy businesses in April 2024 has worked out well so far for GE Aerospace and the energy business GE Vernova.

GE data by YCharts

ASML: A nice AI beat amid the DeepSeek panic

Shares of the Dutch AI giant ASML (NASDAQ: ASML) enjoyed nice gains following its fourth-quarter earnings report on Jan. 29 that beat estimates and delivered guidance ahead of expectations. ASML reported net income of $2.8 billion, roughly $500 million ahead of analyst estimates. Net sales came in at $9.64 billion, nearly $200 million above estimates. Management also left its 2025 revenue outlook unchanged.

As many investors know, AI stocks struggled since the emergence of China's DeepSeek AI chatbot, which allegedly built a version similar to OpenAI's ChatGPT at a fraction of the cost. But on ASML's earnings call, CEO Christophe Fouquet told investors that he views DeepSeek as a bullish catalyst for the sector because cheaper AI will ultimately lead to more demand for semiconductors.

ASML is the sole manufacturer of lithography machines needed to make the advanced chips that power AI. Lithography machines carve patterns into silicon wafers. Fouquet also told investors that the company's outlook for its sales to China remains unchanged, and that Chinese sales should make up about 20% of revenue in 2025, although further export controls and geopolitical tensions are a risk. Given what has happened in the AI sector recently, ASML's report is at the very least a small sigh of relief for AI investors.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, GE HealthCare Technologies, Macquarie Group, and Netflix. The Motley Fool recommends GE Aerospace. The Motley Fool has a disclosure policy.