We are in the second half of the year. It’s the time for new product launches and seasonal rallies. This year is especially strong for a few tech stocks as the Personal Computer (PC) refresh cycle is coming. Original equipment manufacturers (OEMs) foresee not just any PC refresh cycle but an artificial intelligence (AI) PC cycle coming.
- Firstly, Microsoft’s Windows 10 is reaching its end of life.
- Secondly, the bulk purchase of PCs during the 2020 pandemic has shifted the five-year PC refresh cycle to 2025.
- Lastly, the growing AI workload on PCs necessitates upgraded hardware with higher memory.
Two tech stocks to buy hand over fist
AMD stock
The above trends make Advanced Micro Devices (NASDAQ:AMD) a stock to buy hand over fist. Its Ryzen central processing units (CPUs) have helped it gain share from Intel in the laptop and desktop CPU market. According to Mercury Research data released by wccftech, AMD increased its desktop CPU share by 4.1 points year-over-year to 28% and laptop CPU share by 3.2 points to 22.5% in the first quarter of 2025.
AMD’s Computing and Graphics segment was its largest until 2024, when the data centre segment overtook it in terms of revenue. A PC refresh cycle could significantly boost AMD’s revenue and profits. And to top it off, its recently launched AMD Instinct MI350 Series for hyperscalers could drive data centre revenue. With two out of three segments showing strong growth, AMD is gearing up for a cyclical rally that could double your money.
Descartes Systems stock
Another tech stock worth buying is Descartes Systems (TSX:DSG), which dipped in June because of cost-cutting initiatives. However, the second half brings seasonal growth opportunities between July and October, ahead of the holiday season sales. Most e-commerce companies and retailers would stock up on PCs for the refreshment cycle. The tariff uncertainty could increase inflation and stifle e-commerce holiday sales. However, Descartes’ logistics and supply chain software business could see an uptick in other areas, like gas exports or airlines.
The June dip is a perfect opportunity to buy the stock. Even if export trading activity slows, domestic logistics could drive Descartes’ revenue. You can expect long-term growth from this stock.
The above two stocks have a net cash position, strong management, high profit margins, and strong growth prospects. All these factors justify their high valuation and also support future growth. Not all tech stocks enjoy these strong fundamentals.
Two tech stocks to avoid
Dye & Durham (TSX:DND) stock has lost 56% of its value, and Lightspeed Commerce (TSX:LSPD) stock has lost 39% since December 2024. These stocks have lost significant value after reaching a peak in the 2021 tech bubble and now trade below their initial public offering (IPO) price
This long-term value loss shows deeply integrated structural issues after these companies went on an acquisition spree during the pandemic.
Dye & Durham
Dye & Durham made several cash acquisitions and leveraged its balance sheet, which increased interest expenses and led to the company incurring losses. Activist shareholders demanded a place on the board of the legal tech software firm, to which the owner and the original management responded by walking out.
This whole boardroom drama left the company with an interim CEO, a changed business strategy, and revenue declines. The new management has to regain investors’ trust, clean up the balance sheet, and grow revenue. Unless there is consistency in performance, it is better to avoid this stock because if things don’t go as expected, the management might consider selling the company after revamping it.
Lightspeed Commerce
Lightspeed Commerce made too many all-share acquisitions during the pandemic at very high valuations. The founder and CEO made the acquisitions and then stepped down, leaving the chief financial officer in charge of making the acquired companies profitable. However, the end of the e-commerce bubble in 2022 left the company with too many overvalued acquisitions. The founder returned as an interim CEO in February 2024 and is now focusing on organic growth.
Before starting fresh, Lightspeed has to undo the inflated value of acquisitions. It impaired its goodwill twice, US$748.7 million in fiscal 2023 and US$556.4 million in fiscal 2025. It is difficult to say if the $2.1 billion market cap is an apt valuation or if more impairment is in the cards. The company is still making losses while its rival Shopify has turned profitable.
Lightspeed stock has enjoyed seasonal rallies in the second half. However, its long-term downtrend makes it a stock to avoid for long-term investors.
