The first half of 2025 has concluded, and while the S&P 500(SNPINDEX: ^GSPC) experienced an approximate 5% gain during this timeframe, the journey was anything but easy for investors. The index faced a significant year-to-date drop of 15% at its lowest in April, due to President Donald Trump announcing tariffs on imports from various trading partners.
Despite the overall market recovery, certain growth stocks like SentinelOne(NYSE: S) and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) continue to show negative year-to-date performance. However, both companies may see a rebound in the latter half of 2025, considering the robustness of their businesses and their leadership in sectors such as artificial intelligence (AI).
The case for SentinelOne
SentinelOne has developed an AI-driven cybersecurity platform named Singularity, providing extensive protection for cloud networks, user identities, and devices. The system autonomously detects and neutralizes threats, producing detailed reports on incidents, thus alleviating the need for extensive human investigation.
Enhanced by the new Purple AI Athena, an AI virtual assistant, Singularity helps users expedite cybersecurity tasks. Athena is designed to replicate the decision-making capabilities of a seasoned human while operating at machine efficiency, allowing it to learn from incidents and set up automated workflows for future threat management.
The case for Alphabet (Google)
As the parent company of Google, YouTube, and Waymo, Alphabet’s primary revenue source is advertising via Google Search. Yet, competition from AI chatbots, which have been diverting traffic away from conventional search engines, poses a risk to this revenue stream. In response, Alphabet has introduced AI Overviews to enhance search results, promoting this feature to retain users.
Moreover, with its Gemini large language models, Alphabet has created an AI chatbot and integrated this technology into various Google Workspace applications. This strategy aims to keep users within Alphabet’s ecosystem, enhancing retention. Google Cloud, noted for its rapid growth, continues to be a significant asset for Alphabet, leveraging AI technology to serve businesses effectively.
Alphabet’s total revenue was reported at $90.2 billion for the first quarter of 2025, reflecting a 12% year-over-year increase. This includes significant contributions from both Google Search and Google Cloud. However, the company currently faces challenges due to legal issues related to monopoly practices and ongoing litigation that may stretch for years. Despite this, AI presents a substantial growth opportunity for Alphabet, suggesting a potentially fruitful trajectory as investor focus shifts toward its innovative offerings.
