How to analyze NASDAQ stocks: Fundamental metrics that matter
The NASDAQ 100 trades at roughly 32 times trailing earnings in February 2026. That is a 15%-18% premium to the S&P 500. Indian investors pouring capital into US markets through the LRS route need a clear framework to separate overpriced momentum plays from genuinely undervalued growth companies. Fundamental analysis of NASDAQ stocks requires examining revenue quality, earnings power, valuation multiples, competitive positioning, and management decisions before committing a single rupee.
The Q4 2025 earnings season tells a striking story. Apple posted record revenue of $143.8 billion. NVIDIA reported $57 billion in a single quarter. Meta grew revenue 24% year over year. Yet Amazon fell 9% after earnings despite beating estimates, punished for guiding $200 billion in AI capex. Numbers alone do not tell the whole story—understanding which metrics matter gives Indian investors a genuine analytical edge.
Revenue and earnings: the starting point
Revenue growth rate is the first number to check when evaluating any NASDAQ stock. It reveals whether a company is gaining or losing market share. Among the Magnificent Seven, growth rates vary widely. NVIDIA grew revenue 62% year over year in its latest quarter. Meta grew 24%. Apple grew 16%. Tesla's revenue actually declined 3%, its first annual drop ever.
Raw revenue means little without context. Always compare a company's growth rate against its sector average and its own historical trend. A company growing 15% sounds strong until you discover it grew 40% two years ago. Decelerating growth often signals a maturing business.
Earnings per share tell you how much profit reaches shareholders after all expenses. During Q4 2025, six of seven Magnificent Seven stocks beat estimates. The market still sold off several points because investors looked ahead. Earnings beats matter less than future guidance and earnings quality.
Free cash flow deserves equal attention. A company can report positive earnings while burning cash through heavy capital spending. Amazon earned roughly $1.95 per share in Q4 2025 but guided $200 billion in 2026 capex. Free cash flow strips away accounting adjustments and shows the actual cash a business generates after reinvestment.
Growth rate evaluation: separating fast from sustainable
Not all revenue growth rate patterns carry equal value. Indian investors should distinguish between organic growth and acquisition-driven growth. Broadcom's 28% revenue growth in Q4 2025 partly reflects its massive VMware acquisition. Organic growth from existing products tells a cleaner story about competitive strength.
The Rule of 40 helps evaluate growth-stage technology companies. Add the revenue growth rate to the profit margin. If the sum exceeds 40, the company balances growth and profitability well. Fewer than 25% of tracked SaaS companies clear this threshold. Companies consistently beating the Rule of 40 command valuation multiples two to three times higher.
Sequential quarter-over-quarter growth patterns reveal momentum shifts faster than annual comparisons. A company growing revenue 30% annually but showing flat sequential quarters may be hitting a wall. Conversely, accelerating sequential growth often precedes a stock re-rating higher.
Valuation metrics: P/E ratio, P/S, and PEG
The P/E ratio tech stocks carry varies enormously depending on growth and margin profiles. The NASDAQ 100 currently trades at a trailing P/E of roughly 32x, compared to its five-year average of 30x and its twenty-year average of 22x. The S&P 500 Information Technology sector trades even higher at 38 times trailing earnings.
What counts as a good P/E ratio for tech stocks depends on the company's stage. Mature large-cap technology companies like Microsoft and Apple trade at 25 to 35 times earnings. High-growth semiconductor companies like NVIDIA trade at 46 times trailing earnings but only 27 times forward earnings because growth compresses the multiple rapidly. Tesla trades at 376 times trailing earnings, a valuation that only makes sense if you believe in its robotaxi and humanoid-robot optionality.
The price-to-sales ratio matters most for unprofitable companies where P/E is meaningless. The NASDAQ 100's current P/S of 6.71 is near an all-time high, more than double its historical median of 2.85. For individual stocks, compare P/S to sector peers and to the company's five-year range.
The PEG ratio divides P/E by the expected earnings growth rate. It reveals the value that raw P/E conceals. In February 2026, AMD trades at a PEG of 0.62, NVIDIA at 0.73, Adobe at 0.89, and Salesforce at 0.92. All four sit below 1.0, meaning their growth rates more than justify current prices. Apple's PEG of 3.10 and Tesla's 5.43 suggest significant premiums over growth-justified valuations. Indian investors should screen for PEG ratios below 1.5 as a starting filter.
Competitive moat assessment: what protects long-term value
A moat assessment tech companies pass determines whether today's profits endure for decades or evaporate within years. Morningstar rates 219 of 836 US-listed stocks as wide-moat, meaning competitive advantages likely lasting 20 or more years.
Network effects create the strongest moats in technology. Meta's 3.07 billion monthly active users form a social graph that competitors cannot replicate. Alphabet's Google Search handles billions of daily queries, feeding a data flywheel where more searches produce better results, attracting more users and more advertiser spending. Google holds roughly 90% global search market share.
Switching costs lock in enterprise customerseffectively. Microsoft's Office 365, Azure, and Teams are deeply embedded in corporate workflows, so that a migration would cost millions. Industry-standard file formats drive Adobe's dominance in Creative Cloud. Salesforce's CRM integrates so thoroughly into business processes that switching costs exceed the cost of the software.
NVIDIA's CUDA ecosystem represents perhaps the most important technology moat of 2026. With a twenty-year head start, over four million developers, and 3,000 GPU-accelerated applications, NVIDIA commands 80% to 90% market share in AI accelerators. AMD's competing ROCm platform still trails by two to three times on training workloads despite competitive hardware.
Cost advantages protect companies like Amazon, whose AWS operates at a 35% operating margin, with scale economies that smaller providers cannot match. For Indian investors, the moat framework comprises five steps: identify the source, test durability, measure the moat's width through sustained returns on capital, assess threats, and monitor whether the moat is widening or narrowing.
Profit margin analysis: the quality signal
Profit margin analysis reveals the actual quality gap between technology sub-sectors. Software companies typically earn 72% gross margins and 33% operating margins. Semiconductor companies earn 59% gross margins and 35% operating margins. Hardware companies earn just 38% gross margins and 23% operating margins.
Among current NASDAQ leaders, NVIDIA stands out with approximately 73% gross margins and 60% operating margins, the highest among the Magnificent Seven. Adobe's 89.5% gross margin is the highest in the group, demonstrating pure software economics at scale. Tesla's margins have compressed to 20% gross and roughly 6% operating, the lowest among these peers, after aggressive price cuts.
The AI capital expenditure cycle is creating a two-tier margin story. Semiconductor suppliers like NVIDIA and Broadcom are benefiting from expanding margins driven by AI demand. Broadcom's non-GAAP operating margin reached 66%. Meanwhile, hyperscale consumers face compression from over $500 billion in combined 2026 spending. Always compare margins against direct sector peers rather than across different sub-sectors.
Management quality: what to check from India
Insider ownership signals whether management has skin in the game. Tesla leads the Magnificent Seven with Elon Musk holding over 20%. Meta's Mark Zuckerberg controls roughly 13% of the company, with majority voting power through dual-class shares. Amazon's Jeff Bezos holds approximately 10%. Apple's Tim Cook has a modest personal stake of less than 1% but receives substantial stock-based compensation.
Capital allocation decisions reveal management priorities. Apple repurchases over $100 billion in shares annually, the most aggressive buyback globally. NVIDIA spent $36 billion on share repurchases in the nine months ended October 2025. Alphabet and Meta both initiated their first-ever dividends in 2024, signalling confidence in sustainable cash generation.
Research and development spending intensity reveals innovation commitment. Amazon leads at roughly $86 billion annually. Meta spends the highest proportion of gross profit at 34%. Employee satisfaction on Glassdoor provides a cultural signal: NVIDIA leads at 4.6 out of 5.0, while Tesla scores lowest at 3.5 to 3.8.
Technical analysis basics for timing entries
While fundamentals drive long-term value, technical indicators help Indian investors time entries across time zones. The NASDAQ trades from 7:00 PM to 1:30 AM IST, making limit orders essential.
The 50-day moving average captures short-term momentum. The 200-day moving average tracks the long-term trend. When the 50-day crosses above the 200-day, it signals bullish momentum. When it crosses below, it signals bearish conditions. In early February 2026, the NASDAQ 100 trades below both its 50-day and 200-day moving averages for the first time in months.
The Relative Strength Index measures whether a stock is overbought or oversold on a scale of 0 to 100. A reading below 30 suggests oversold conditions, and a reading above 70 signals overbought territory. The NASDAQ 100's RSI sat at 34.3 in early February 2026, approaching oversold levels.
Volume confirms price moves. A breakout on high volume carries more conviction than one on thin trading. Indian investors should combine fundamental screening with technical timing: identify quality companies using P/E, PEG, and margin analysis, then use moving averages and RSI to time entries near support levels.
Research resources accessible from India
SEC EDGAR provides free access to every US public company filing: 10-K annual reports, 10-Q quarterly filings, and insider transactions. Yahoo Finance and Finviz offer stock screening and financial data. Macrotrends delivers ten-year historical data. Simply Wall St provides visual health diagrams in its free tier.
For paid tools, Seeking Alpha Premium offers quant ratings at $239 per year. Morningstar Premium provides fair value estimates and moat ratings at $249 per year. TradingView Pro offers advanced charting for $13 to $60 per month.
Indian platforms have matured significantly. Winvesta offers 8,000+ US stocks and ETFs with fractional investing and LRS-compliant transfers. INDmoney combines US stocks, mutual funds, and fixed deposits with zero brokerage. Interactive Brokers provides 170 or more global markets with the lowest forex costs for active traders.
Indian investors are subject to a 25% US withholding tax on dividends, which is claimable as a credit under the India-US DTAA via Form 67. Long-term capital gains on holdings exceeding 24 months attract a flat 12.5% rate. Short-term gains are subject to your income tax slab rate. This 17-plus-point tax gap strongly favours holding high-quality NASDAQ stocks for the long term rather than trading them frequently. The analytical framework in this guide helps you identify which stocks warrant a long-term commitment.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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Table of Contents
The NASDAQ 100 trades at roughly 32 times trailing earnings in February 2026. That is a 15%-18% premium to the S&P 500. Indian investors pouring capital into US markets through the LRS route need a clear framework to separate overpriced momentum plays from genuinely undervalued growth companies. Fundamental analysis of NASDAQ stocks requires examining revenue quality, earnings power, valuation multiples, competitive positioning, and management decisions before committing a single rupee.
The Q4 2025 earnings season tells a striking story. Apple posted record revenue of $143.8 billion. NVIDIA reported $57 billion in a single quarter. Meta grew revenue 24% year over year. Yet Amazon fell 9% after earnings despite beating estimates, punished for guiding $200 billion in AI capex. Numbers alone do not tell the whole story—understanding which metrics matter gives Indian investors a genuine analytical edge.
Revenue and earnings: the starting point
Revenue growth rate is the first number to check when evaluating any NASDAQ stock. It reveals whether a company is gaining or losing market share. Among the Magnificent Seven, growth rates vary widely. NVIDIA grew revenue 62% year over year in its latest quarter. Meta grew 24%. Apple grew 16%. Tesla's revenue actually declined 3%, its first annual drop ever.
Raw revenue means little without context. Always compare a company's growth rate against its sector average and its own historical trend. A company growing 15% sounds strong until you discover it grew 40% two years ago. Decelerating growth often signals a maturing business.
Earnings per share tell you how much profit reaches shareholders after all expenses. During Q4 2025, six of seven Magnificent Seven stocks beat estimates. The market still sold off several points because investors looked ahead. Earnings beats matter less than future guidance and earnings quality.
Free cash flow deserves equal attention. A company can report positive earnings while burning cash through heavy capital spending. Amazon earned roughly $1.95 per share in Q4 2025 but guided $200 billion in 2026 capex. Free cash flow strips away accounting adjustments and shows the actual cash a business generates after reinvestment.
Growth rate evaluation: separating fast from sustainable
Not all revenue growth rate patterns carry equal value. Indian investors should distinguish between organic growth and acquisition-driven growth. Broadcom's 28% revenue growth in Q4 2025 partly reflects its massive VMware acquisition. Organic growth from existing products tells a cleaner story about competitive strength.
The Rule of 40 helps evaluate growth-stage technology companies. Add the revenue growth rate to the profit margin. If the sum exceeds 40, the company balances growth and profitability well. Fewer than 25% of tracked SaaS companies clear this threshold. Companies consistently beating the Rule of 40 command valuation multiples two to three times higher.
Sequential quarter-over-quarter growth patterns reveal momentum shifts faster than annual comparisons. A company growing revenue 30% annually but showing flat sequential quarters may be hitting a wall. Conversely, accelerating sequential growth often precedes a stock re-rating higher.
Valuation metrics: P/E ratio, P/S, and PEG
The P/E ratio tech stocks carry varies enormously depending on growth and margin profiles. The NASDAQ 100 currently trades at a trailing P/E of roughly 32x, compared to its five-year average of 30x and its twenty-year average of 22x. The S&P 500 Information Technology sector trades even higher at 38 times trailing earnings.
What counts as a good P/E ratio for tech stocks depends on the company's stage. Mature large-cap technology companies like Microsoft and Apple trade at 25 to 35 times earnings. High-growth semiconductor companies like NVIDIA trade at 46 times trailing earnings but only 27 times forward earnings because growth compresses the multiple rapidly. Tesla trades at 376 times trailing earnings, a valuation that only makes sense if you believe in its robotaxi and humanoid-robot optionality.
The price-to-sales ratio matters most for unprofitable companies where P/E is meaningless. The NASDAQ 100's current P/S of 6.71 is near an all-time high, more than double its historical median of 2.85. For individual stocks, compare P/S to sector peers and to the company's five-year range.
The PEG ratio divides P/E by the expected earnings growth rate. It reveals the value that raw P/E conceals. In February 2026, AMD trades at a PEG of 0.62, NVIDIA at 0.73, Adobe at 0.89, and Salesforce at 0.92. All four sit below 1.0, meaning their growth rates more than justify current prices. Apple's PEG of 3.10 and Tesla's 5.43 suggest significant premiums over growth-justified valuations. Indian investors should screen for PEG ratios below 1.5 as a starting filter.
Competitive moat assessment: what protects long-term value
A moat assessment tech companies pass determines whether today's profits endure for decades or evaporate within years. Morningstar rates 219 of 836 US-listed stocks as wide-moat, meaning competitive advantages likely lasting 20 or more years.
Network effects create the strongest moats in technology. Meta's 3.07 billion monthly active users form a social graph that competitors cannot replicate. Alphabet's Google Search handles billions of daily queries, feeding a data flywheel where more searches produce better results, attracting more users and more advertiser spending. Google holds roughly 90% global search market share.
Switching costs lock in enterprise customerseffectively. Microsoft's Office 365, Azure, and Teams are deeply embedded in corporate workflows, so that a migration would cost millions. Industry-standard file formats drive Adobe's dominance in Creative Cloud. Salesforce's CRM integrates so thoroughly into business processes that switching costs exceed the cost of the software.
NVIDIA's CUDA ecosystem represents perhaps the most important technology moat of 2026. With a twenty-year head start, over four million developers, and 3,000 GPU-accelerated applications, NVIDIA commands 80% to 90% market share in AI accelerators. AMD's competing ROCm platform still trails by two to three times on training workloads despite competitive hardware.
Cost advantages protect companies like Amazon, whose AWS operates at a 35% operating margin, with scale economies that smaller providers cannot match. For Indian investors, the moat framework comprises five steps: identify the source, test durability, measure the moat's width through sustained returns on capital, assess threats, and monitor whether the moat is widening or narrowing.
Profit margin analysis: the quality signal
Profit margin analysis reveals the actual quality gap between technology sub-sectors. Software companies typically earn 72% gross margins and 33% operating margins. Semiconductor companies earn 59% gross margins and 35% operating margins. Hardware companies earn just 38% gross margins and 23% operating margins.
Among current NASDAQ leaders, NVIDIA stands out with approximately 73% gross margins and 60% operating margins, the highest among the Magnificent Seven. Adobe's 89.5% gross margin is the highest in the group, demonstrating pure software economics at scale. Tesla's margins have compressed to 20% gross and roughly 6% operating, the lowest among these peers, after aggressive price cuts.
The AI capital expenditure cycle is creating a two-tier margin story. Semiconductor suppliers like NVIDIA and Broadcom are benefiting from expanding margins driven by AI demand. Broadcom's non-GAAP operating margin reached 66%. Meanwhile, hyperscale consumers face compression from over $500 billion in combined 2026 spending. Always compare margins against direct sector peers rather than across different sub-sectors.
Management quality: what to check from India
Insider ownership signals whether management has skin in the game. Tesla leads the Magnificent Seven with Elon Musk holding over 20%. Meta's Mark Zuckerberg controls roughly 13% of the company, with majority voting power through dual-class shares. Amazon's Jeff Bezos holds approximately 10%. Apple's Tim Cook has a modest personal stake of less than 1% but receives substantial stock-based compensation.
Capital allocation decisions reveal management priorities. Apple repurchases over $100 billion in shares annually, the most aggressive buyback globally. NVIDIA spent $36 billion on share repurchases in the nine months ended October 2025. Alphabet and Meta both initiated their first-ever dividends in 2024, signalling confidence in sustainable cash generation.
Research and development spending intensity reveals innovation commitment. Amazon leads at roughly $86 billion annually. Meta spends the highest proportion of gross profit at 34%. Employee satisfaction on Glassdoor provides a cultural signal: NVIDIA leads at 4.6 out of 5.0, while Tesla scores lowest at 3.5 to 3.8.
Technical analysis basics for timing entries
While fundamentals drive long-term value, technical indicators help Indian investors time entries across time zones. The NASDAQ trades from 7:00 PM to 1:30 AM IST, making limit orders essential.
The 50-day moving average captures short-term momentum. The 200-day moving average tracks the long-term trend. When the 50-day crosses above the 200-day, it signals bullish momentum. When it crosses below, it signals bearish conditions. In early February 2026, the NASDAQ 100 trades below both its 50-day and 200-day moving averages for the first time in months.
The Relative Strength Index measures whether a stock is overbought or oversold on a scale of 0 to 100. A reading below 30 suggests oversold conditions, and a reading above 70 signals overbought territory. The NASDAQ 100's RSI sat at 34.3 in early February 2026, approaching oversold levels.
Volume confirms price moves. A breakout on high volume carries more conviction than one on thin trading. Indian investors should combine fundamental screening with technical timing: identify quality companies using P/E, PEG, and margin analysis, then use moving averages and RSI to time entries near support levels.
Research resources accessible from India
SEC EDGAR provides free access to every US public company filing: 10-K annual reports, 10-Q quarterly filings, and insider transactions. Yahoo Finance and Finviz offer stock screening and financial data. Macrotrends delivers ten-year historical data. Simply Wall St provides visual health diagrams in its free tier.
For paid tools, Seeking Alpha Premium offers quant ratings at $239 per year. Morningstar Premium provides fair value estimates and moat ratings at $249 per year. TradingView Pro offers advanced charting for $13 to $60 per month.
Indian platforms have matured significantly. Winvesta offers 8,000+ US stocks and ETFs with fractional investing and LRS-compliant transfers. INDmoney combines US stocks, mutual funds, and fixed deposits with zero brokerage. Interactive Brokers provides 170 or more global markets with the lowest forex costs for active traders.
Indian investors are subject to a 25% US withholding tax on dividends, which is claimable as a credit under the India-US DTAA via Form 67. Long-term capital gains on holdings exceeding 24 months attract a flat 12.5% rate. Short-term gains are subject to your income tax slab rate. This 17-plus-point tax gap strongly favours holding high-quality NASDAQ stocks for the long term rather than trading them frequently. The analytical framework in this guide helps you identify which stocks warrant a long-term commitment.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
Ready to earn on every trade?
Invest in 11,000+ US stocks & ETFs
