In this article, we will talk about the 14 best new tech stocks to buy now.
Tech Stocks Should Not Be Divested From
Tech stocks have long gained the attention of investors, with tech giants helping the S&P 500 climb a staggering 400% from 2009 to 2022. The Nasdaq 100 index did even better, surging over 700% in the same period.
However, the first half of 2022 saw a brutal market correction, the worst in 50 years for Wall Street. Geopolitical tensions, skyrocketing energy prices, and rising interest rates all played a part. Tech stocks took a heavy hit, with large tech companies dropping as high as 39% at one point.
Tech stocks are risky investments. When money was cheap during the pandemic, people borrowed a lot and invested in tech and crypto. This made the prices go up very high, overvaluing the tech sector. But when central banks raised interest rates, people started selling tech, which made the prices go down.
Earlier this week, we posted an article 10 Best Emerging Tech Stocks to Buy Now, where Mad Money host and former hedge fund manager Jim Cramer said that tech stocks should not be divested from. Here’s an excerpt from that article:
“He (Cramer) believes that major technology firms, which are integral to ongoing robust trends like data centers and accelerated computing, should be viewed as attractive buying opportunities when the market weakens, instead of the opposite sentiment…. September is historically the weakest month for the market, with consistent profit-taking. But, he sees this as a circular argument rather than a sign of an economic downturn. He believes the broader selling pressure in September is due to tech stocks meeting but not exceeding expectations.”
This is especially important to absorb as we see more and more analysts move away from the anticipation of a recession. Anastasia Amoroso, iCapital chief investment strategist, says that despite signs of a weakening labor market, such as rising unemployment and increased layoffs, she does not foresee an imminent recession. The market is expecting a 25-basis point rate cut from the Fed, possibly a larger 50-basis point cut if economic indicators worsen.
The economy is still growing at a rate of 2%, although it’s slower than before. Amoroso noted that key economic indicators do not suggest a high probability of a recession. While the market is cautious, there is potential for a positive outlook. Rate cuts and a slowing economy could lead to a more favorable market environment.
IPO Outlook
EY Global IPO Trends Q2 2024 reported that in the first half of 2024, global IPO activity experienced a downturn, with volumes declining by 12% (551 listings raising a total of $52.2 billion in capital) and proceeds declining by 16% compared to the previous year.
For the first time in 16 years, the EMEIA region reclaimed the top spot in terms of global IPO market share by number of deals. Industrials emerged as the leading sector in terms of the number of IPOs, while the technology sector raised the most capital through IPOs.
Earlier this year in May, Goldman Sachs Chair and CEO, David Solomon, at a Summit in France, said he is concerned that fewer companies are going public but expects IPO activity to pick up in the second half of 2024.
Solomon provided insights into the recent volatility in equity markets and noted that trillion-dollar companies were experiencing significant swings of up to 10% post-earnings. He acknowledged that such volatility could stimulate business activity, but expressed concerns about the potential narrowing of public markets.
He believes hyper-scalers have grown due to their competitive edge and recent tech advancements. Despite market volatility, he trusts in its efficiency and the importance of public markets for capital allocation and transparency.
Solomon expressed concern over the declining number of public companies due to abundant private market capital and emphasized the need for open, inclusive public markets. While the IPO market has recently revived, he anticipates a gradual increase in activity in the second half of 2024, going into 2025, though less intense than in 2021. However, the trend of companies staying private longer contributes to the overall decline in publicly traded entities.
Recently, CNBC’s Deidre Bosa talked about the significant energy demands of AI and the efforts of tech giants to address this growing need. She highlighted some recent big-tech investments in data centers and nuclear power facilities to back up her claim.
Jensen Huang admitted the related high energy costs but noted AI’s potential to develop energy-saving solutions. Bosa and Huang agree that public-private partnerships are crucial for addressing AI’s energy consumption. While training AI models is energy-intensive, the long-term benefits in areas like healthcare, climate, and grid management outweigh the costs. Both believe AI can revolutionize energy efficiency through innovative solutions.
Amoroso’s insights suggest that the overall economic outlook does not indicate a recession, while Bosa and Huang foresee higher tech investments due to growing AI demand. So with caution and strategic adjustments in investment approaches, potential investment risks can be avoided in the tech sector. With that, we’re here with a list of the 14 best new tech stocks to buy now.
Methodology
We used stock screeners to look for companies that went public in the past 3 years. We sorted our screen by IPO date and market cap and looked through the top 30 stocks that went public in the last 3 years and are trading over $1 billion. We then selected 14 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
14 Best New Tech Stocks To Buy Now
14. Samsara Inc. (NYSE:IOT)
Market Capitalization as of September 13: $25.74 billion
Number of Hedge Fund Holders: 26
Samsara Inc. (NYSE:IOT) is a leading provider of Internet of Things IoT solutions for businesses, offering a single platform for fleet operations at scale. It specializes in connected operations technology, offering a suite of products and services that help organizations manage their physical assets, improve efficiency, and enhance safety. Products include real-time GPS, AI-powered dash cams, routing, and driver apps.
In the fiscal second quarter of 2025, the company added 169 customers with more than $100,000 in ARR and a quarterly record of 14 customers with over $1 million.
The company made $300.20 million in revenue in FQ2 2025, recording a 36.92% year-over-year improvement. The earnings per share were $0.05.
Samsara Inc. (NYSE:IOT) collects 10 trillion data points annually which helps customers tackle challenges. At Samsara Beyond this year in June, 2,000 attendees discussed data and AI for Connected Operations and revealed that their top priorities include creating a system of record for their operations, standardizing their data, and using more AI for insights.
It honored 15 global customers in 2024. Home Depot, with Temco Logistics, reduced auto incidents by 80% using Samsara’s video safety app. Sterling Crane saved $1.2 million through improved driver productivity and compliance.
Recently, it launched Asset Tag, an industrial-grade Bluetooth tag for tracking small assets, helping customers save money by increasing asset utilization, preventing loss, and improving worker efficiency. In Q2, it generated $1 million in new annual contract value.
The company is transforming the worker experience with technology. Its Connected Workflows product automates multistep workflows, making work safer and easier. All these applications position the company for success. As of FQ2 2025, it’s held by 26 hedge funds, of which the largest stake is at $49,665,274 by Atreides Management.
Baron Opportunity Fund stated the following regarding Samsara Inc. (NYSE:IOT) in its Q2 2024 investor letter:
“We initiated a position in Samsara Inc. (NYSE:IOT) during the quarter. Samsara provides a cloud software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers’ commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 17,500 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and last year the company became one of the fastest software companies ever to reach $1 billion in annual recurring revenue (ARR). Samsara has been winning share from competitors in the $51 billion connected fleet software market due to its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. As Samsara continues to expand its connected asset base, it is building an unmatched data asset that it is using to drive better outcomes for its customers. Capturing more than 9 trillion data points from over 44 billion hours of camera footage across millions of miles driven, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, reduce fuel expenses, and lower insurance premiums. In 2023, across its customer base, the company prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds. We see a long runway for growth as Samsara expands in existing accounts and wins new logos. Samsara is less than 50% penetrated in its existing customers’ vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products (which already account for $125 million of ARR) into its base. The company has also increased its customer count by more than 20% year-over-year every quarter and identified hundreds of thousands of potential new accounts to win. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow margins can ultimately expand beyond 20% longer term.”
13. AvidXchange Holdings Inc. (NASDAQ:AVDX)
Market Capitalization as of September 13: $1.61 billion
Number of Hedge Fund Holders: 27
AvidXchange Holdings Inc. (NASDAQ:AVDX) is a leading provider of accounts payable (AP) automation software and payment solutions for middle-market businesses in North America and their suppliers. The platform automates and digitizes the entire accounts payable process, from invoice capture to payment, making it more efficient and cost-effective.
The company’s initiatives around automation, AI, sourcing, and standardization, which are still somewhat in the early stages continue to bear fruit and resulted in a strong Q2 2024. Revenue growth in the quarter was $105.13 million, up 15.33% year-over-year.
It recently signed new API integration partnerships and deepened its relationship with Buildium, a real estate software company, extending the relationship to real page. Buildium has 15,000 customers, 3,500 of which fit AvidXchange’s product. The partnership uses GenAI, reducing development time by 30% and improving user experience.
This referral partnership goes live in Q3 2024, starting with AP automation invoice solutions. It represents a significant payment opportunity, and can potentially add billions in new payment volume, according to management.
Many suppliers have online payment portals. The company handles 80% of these payments manually. AI can automate this process, reducing costs and improving control, scaling the process up by 2025.
27 hedge funds have stakes in the company, with the largest one valued at $131,169,625 by Rima Senvest Management. AvidXchange Holdings Inc. (NASDAQ:AVDX) is well-positioned to capitalize on the growing demand for digital transformation in the middle market, especially as we see positive investor sentiments.
12. Rubrik Inc. (NYSE:RBRK)
Market Capitalization as of September 13: $5.45 billion
Number of Hedge Fund Holders: 28
Rubrik Inc. (NYSE:RBRK) is a cloud data management and data security company that specializes in data backup, recovery, and protection. Its platform is designed to simplify data management for businesses, providing a unified solution for both on-premises and cloud-based data.
The company delivers complete cyber resilience. It combines DSPM (Data Security Posture Management) with cyber recovery, enabling cyber resilience. Its AI-powered architecture delivers data risk, data set, and rapid cyber recovery that is scalable. Other products can take up to 100 times longer for cyber recovery.
In the second fiscal quarter of 2025, a Fortune 500 European Automotive supplier selected Rubrik Inc. (NYSE:RBRK) as its de facto cyber resilience platform. Around the same time, an American multinational investment bank replaced a competing vendor with this company, and so did a US Insurance company. 28 hedge funds are long in this company as of June 30.
The company has achieved a 35-second recovery time compared to 5 hours. A Fortune 500 beauty leader expanded their RSC (Rubrik Security Cloud) footprint with Rubrik’s cloud-native protection for Azure.
Overall, revenue was $204.95 million in FQ2 2025, up 35% year-over-year. Revenue from the Americas grew 36% to $147 million. Revenue from outside the Americas grew 34% to $58 million.
Subscription average recurring revenue reached $919 million, up 40% year-over-year. Subscription revenue was $191 million, up 50% year-over-year, while subscription net revenue retention remained strong above 120%.
Management expects continued strong subscription ARR growth, despite potential headwinds from contract duration and payment terms. Plans to invest in R&D and drive innovation make the company well-positioned to become a leader.
11. Informatica Inc. (NYSE:INFA)
Market Capitalization as of September 13: $7.74 billion
Number of Hedge Fund Holders: 28
Informatica Inc. (NYSE:INFA) is a software development company that offers a suite of tools and solutions that help businesses integrate, manage, and govern their data, enabling them to make better decisions and gain insights from their information. Core products include enterprise cloud data management and data integration.
Total revenue this Q2 grew 6.55% from Q2 in 2023, generating $400.63 million. Subscription ARR grew 15% year-over-year and cloud subscription ARR grew 37% year-over-year, both exceeding the high end of the guidance range. The company hit a record $703 million in cloud subscription ARR.
Customer momentum and consistent execution drove results. The company launched CLAIRE GPT, its generative AI chat interface, on the IDMC platform. Informatica is now the industry’s only cloud data management platform with AI and GenAI capabilities for modern enterprises.
Number of customers spending over $1 million in subscription ARR increased 28% year-over-year to 272. Those spending over $5 million grew 30% year-over-year. Average subscription ARR per customer reached $321,500, a 17% increase year-over-year.
Investor sentiments also remained positive, with 28 hedge funds keeping stakes in the company by this quarter. The largest position is at $67,465,080, held by Jericho Capital Asset Management.
The company is innovating with its Intelligent Data Management Cloud (IDMC), enhancing data ingestion and integration. With over $1 billion in R&D and IDC recognition, IDMC processed 97 trillion cloud transactions in June, a 59% year-over-year increase.
The launch of CLAIRE GPT, an AI-powered data management assistant, aims to improve data discovery and quality, offering free access through 2024. Key wins with customers like American Airlines and Westpac highlight the platform’s effectiveness.
With a guidance increase to 35.5% for cloud subscription ARR, strong operational health, and a robust customer base, Informatica Inc. (NYSE:INFA) is well-positioned for continued growth in the evolving data management and AI landscape.
10. Remitly Global Inc. (NASDAQ:RELY)
Market Capitalization as of September 13: $2.82 billion
Number of Hedge Fund Holders: 29
Remitly Global Inc. (NASDAQ:RELY) is a leading provider of digital financial services that transcend borders and provides online remittance services. It offers international money transfers to over 170 countries quickly, easily, and at a competitive cost. Additional financial services include bill payments and money exchange.
The company delivered $306.42 million in revenue, a 30.93% increase year-over-year, and $4.39 million ahead of estimates. It now serves a quarterly active customer base of ~6.9 million, up 36%, or 1.8 million, year-over-year.
The company’s transactions are now faster, with over 90% completed in under an hour, and 95% of transactions occurring without customer support. Many of its new customers are now sending to markets outside of the top three (India, Mexico, and the Philippines) diversifying the company’s presence.
29 hedge funds are long in the company with a total of 9,680,860 shares. The largest position amounts to $117,332,023 by Cadian Capital, as of June 30.
Remitly Global Inc.’s (NASDAQ:RELY) marketing investments are yielding strong returns, with progress in delivering robust growth. Management is confident in its 2024 outlook as it continues to transform lives with trusted financial services. This positions the company’s stock as a top new stock to look into.
Here is what Pernas Research has to say about Remitly Global, Inc. (NASDAQ:RELY) in its Q3 2023 investor letter:
“Remitly is poised to dominate the global cross-border digital remittance market for two reasons. First, their superior digital platform is taking market share from traditional players. Second, the worldwide shift from cash to digital remittances favors them. Despite having limited current cash flows, they are poised to leverage economies of scale in digital remittances as volumes grow, reducing variable costs and spreading fixed costs across a larger customer base. Their advanced digital solutions, infrastructure, and fraud detection will assist in doubling their market share in three to five years.”
9. Braze Inc. (NASDAQ:BRZE)
Market Capitalization as of September 13: $3.55 billion
Number of Hedge Fund Holders: 30
Braze Inc. (NASDAQ:BRZE) is a cloud-based software company, leading a customer engagement platform that helps businesses build and maintain strong relationships with their customers. It provides tools for customer messaging, personalization, and analytics, enabling companies to deliver relevant and engaging experiences across various channels.
The company generated $145.50 million of revenue, up 26.40% year-over-year in the fiscal second quarter of 2025. The customer count reached 2,163 in this period, an increase of 61 during the quarter and 205 year-over-year. 30 hedge funds are long in the company, with the highest stake valued at $190,352,665 by Cadian Capital.
The company is committed to leveraging challenging environments to differentiate itself as a global leader in customer engagement, which includes elevating its AI capabilities.
Celebrating its 13th anniversary, it launched the Braze Data Platform, which streamlines data unification, activation, and distribution. This platform allows brands to easily integrate first-party data from sources like Amazon Redshift, Databricks, and Snowflake, enhancing personalization and engagement. Customers with over $500,000 ARR grew to 222, up 28% year-over-year.
It plans to enhance its data platform in collaboration with partners like Amperity, Twilio Segment, and others. There are plans to launch initiatives like “Braze for Start-ups,” providing VC-backed companies access to the company platform, and a free 14-day trial for brands to explore its capabilities.
Braze Inc. (NASDAQ:BRZE) is well-positioned to lead in customer engagement as marketers become more ambitious. This company can deliver enhanced relevance and personalization at scale, positioning the company for continued growth and market leadership.
The RiverPark/Next Century Growth Fund stated the following regarding Braze, Inc. (NASDAQ:BRZE) in its fourth quarter 2023 investor letter:
“Braze, Inc. (NASDAQ:BRZE)is a leading next-generation customer engagement platform that allows brands to deliver cross channel marketing campaigns to end customers in real-time. BRZE currently serves about 2,000 customers across a diverse range of verticals, including retail/ecommerce, media & entertainment, financial services, travel & hospitality, quick service restaurants, and social/messaging/gaming. With a next-generation platform addressing the modern needs of an enterprise, Braze is disrupting the market and gaining share from legacy competitors, demonstrated by recent revenue growth in the 30% range with 70%+ gross margins.”
8. NCR Atleos Corp. (NYSE:NATL)
Market Capitalization as of September 13: $1.94 billion
Number of Hedge Fund Holders: 31
NCR Atleos Corp. (NYSE:NATL) is a financial technology company that provides self-directed banking solutions to a global customer base, including financial institutions, merchants, manufacturers, retailers, and consumers. It specializes in ATMs, interactive teller machines (ITMs), and other technologies that enable banks and retailers to offer convenient and efficient services. Currently, 31 hedge funds have stakes in the company.
The company has secured key wins and renewals across various regions, including partnerships with PNC in North America, Tech Bond in Latin America, Banca Avicenna in EMEA, and SBI in Asia Pacific.
In EMEA, there’s a growing preference for A La C.A.R.T.E. Solutions over full outsourcing, while North American smaller institutions favor a fully outsourced model with new hardware. The opportunity for ATM as a Service remains substantial, with revenue growing 31% and active units increasing modestly.
Deposit transactions surged 170% year-over-year, and partnerships with Capital One and Payfare are expanding access for gig workers. NCR Atleos Corp.’s (NYSE:NATL) relationship with Chime has also strengthened, with plans to host Chime brands on over 4,000 ATMs.
Atleos has an installed and service fleet of approximately 600,000 ATMs, including over 80,000 that this company owns and operates. Despite a stable global environment for cash-based transactions and ATM hardware, the growth will come from generating more revenue for each Atleos machine it supports.
Total company revenue was $1.08 billion, with software and services revenue growing 7% and 6%, respectively. Recurring revenue grew 9% to $793 million, comprising 73% of total revenues (up from 70% in the prior year).
NCR Atleos Corp. (NYSE:NATL) is well-positioned for growth, driven by strong customer engagement and partnerships across regions. As the company enhances integrated solutions and drives revenue growth, management is confident in its ability to lead the market.
7. Freshworks Inc. (NASDAQ:FRSH)
Market Capitalization as of September 13: $3.38 billion
Number of Hedge Fund Holders: 33
Freshworks Inc. (NASDAQ:FRSH) is a cloud-based SaaS company that provides tools for customer relationship management, customer support, IT service management, human resources management, and e-commerce marketing. As of October 2023, the company had over 60,000 business clients.
The company grew revenue to $174.13 million in Q2 2024, achieving a 20.02% year-over-year increase. Notable new customers in this period include Kayak and Paul Smith UK. In June, it acquired Device42, enhancing its IT asset management capabilities.
Management says that the company’s customers prioritize AI-driven automation, simplicity, rapid impact, and flexibility in solutions. The IT and employee experience solutions, boasting over $340 million in ARR and 30% year-over-year growth, remain the largest segment.
It also secured 19 new and expansion deals over $100,000 and reached a six-quarter high win rate against its largest competitor in the second quarter. Some important clients using employee experience software include Nucor Steel and Carrefour.
The company is seeing great traction in the AI category, with Freddy Copilot’s adoption growing significantly. Customers are seeing productivity improvements of 30% with Freddy Copilot. European travel company Digitrips improved response times to customer inquiries by nearly 300% using Freddy Copilot.
The company is driving strong customer adoption of its AI products, with customer experience solutions generating approximately $350 million in ARR and experiencing mid-to-high single-digit growth. By simplifying product experiences and streamlining go-to-market processes, it is well-positioned to accelerate growth.
33 hedge funds hold long positions in the company as of this quarter, with a total of 3,134,600 shares. Renaissance Technologies has the largest position with a stake that amounts to $39,778,074.
ClearBridge SMID Cap Growth Strategy stated the following regarding Freshworks Inc. (NASDAQ:FRSH) in its first quarter 2024 investor letter:
“Software development company Freshworks Inc. (NASDAQ:FRSH), whose products include customer service, operations and customer relationship management applications, also saw its share price drift lower as investors began to worry that Freshworks was no longer an AI beneficiary, though we don’t believe this to be the case.”
6. Kyndryl Holdings Inc. (NYSE:KD)
Market Capitalization as of September 13: $5.29 billion
Number of Hedge Fund Holders: 36
Kyndryl Holdings Inc. (NYSE:KD) is an American multinational information technology infrastructure services provider, created from the spin-off of IBM’s infrastructure services business in 2021. It offers a wide range of services, including infrastructure management, application services, cloud migration, and cybersecurity.
The company, with strong infrastructure services established under IBM GTS, aims to return to revenue growth earlier than expected. It anticipates positive revenue growth in Q4 2025, driven by optimism about AI adoption.
As of FQ1 2025, the revenue was $3.74 billion, which recorded a 10.83% year-over-year decline. The earnings per share were $0.13. The decline in revenue was primarily driven by the intentional exit from negative and low-margin revenue streams within ongoing customer relationships.
Kyndryl Bridge delivers over 110 million automation monthly, yielding nearly $3 billion in annual productivity benefits. Kyndryl Consult, which accounts for 17% of the revenue and is a $2.5 billion revenue stream, is growing by double digits.
Kyndryl Consult revenues grew 14% year-over-year. Kyndryl Consult signings grew even faster, up 49%. Total signings grew 14% year-over-year in the fiscal first quarter of 2025.
Kyndryl Holdings Inc. (NYSE:KD) is using GenAI technologies to enhance business outcomes for customers in travel, healthcare, and manufacturing. The recent partnership with NVIDIA will further accelerate AI adoption. 36 hedge funds are long in the company right now, with the largest stake at $116,706,398, held by Greenlight Capital.
The company is positioned for strong growth with its Kyndryl Bridge and Kyndryl Consult platforms. Expertise in AI, cloud migration, and cybersecurity enhances customer outcomes, while partnerships with hyper scalers like SAP and NVIDIA open new opportunities, making this a top new stock.
Greenlight Capital stated the following regarding Kyndryl Holdings, Inc. (NYSE:KD) in its Q2 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. Kyndryl Holdings, Inc. (NYSE:KD) rose from $21.76 to $26.31. The company had another good report, with results and guidance exceeding expectations on all key metrics. KD also pulled forward its target to achieve constant currency revenue growth, now starting in the fourth quarter of the current fiscal year.”
5. Credo Technology Group Holding Ltd. (NASDAQ:CRDO)
Market Capitalization as of September 13: $4.61 billion
Number of Hedge Fund Holders: 36
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is a leading provider of high-speed, mixed-signal semiconductor components that are used in data centers, communications infrastructure, and AI. It specializes in developing innovative solutions that enable high-speed data transmission and processing.
The company reported FQ1 2025 revenue of $59.71 million, with an improvement of 70.15% year-over-year. Product revenues of $57.3 million increased by 30% compared to the prior quarter, driven by rapidly expanding AI deployments.
This is a pure-play high-speed connectivity company. Its strong customer relationships position its AEC solutions as the top choice for in-rack connectivity at 50 gig per lane speeds, with significant growth expected in fiscal year 2025.
In Optical DSP, Credo aims for at least 10% of fiscal year 2025 revenue, pushed by a key design win and the Linear Receive Optics (LRO) concept targeting under 10 watts for 800 gig modules.
The Line Card PHY business benefits from demand for 400-gig and 800-gig solutions in AI applications, while the SerDes licensing and chipset sectors are expanding, offering solutions up to 224 gig speeds across various process geometries from 28 to 3 nanometers.
A 10% customer rise is expected in Q2, and the company plans to enter the 64 gig PAM4 PCIe Gen 6 market. The AEC product line remains a key revenue source, with 800 gig solutions in production and 3-nanometer products for the 1.6T port market expected by 2025. Investor sentiments remain positive for the future, as it’s held by 36 hedge funds currently, of which the highest stake is at $121,097,060 by Driehaus Capital.
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is ready for significant growth as it capitalizes on the dynamic data center market, particularly with the rising demand from emerging hyper scalers and next-tier operators eager to leverage AI technologies. This makes it a top new stock to check out.
NCG Small Cap Strategy stated the following regarding Credo Technology Group Holding Ltd (NASDAQ:CRDO) in its Q2 2024 investor letter:
“Credo Technology Group Holding Ltd (NASDAQ:CRDO) is a semiconductor company focused on high-speed connectivity in the data infrastructure market, primarily the data center market. CRDO’s products enable higher data connectivity speeds with improved power efficiency, and CRDO is seeing accelerated adoption as these products are helping to enable next-generation AI data centers.”
4. Arm Holdings (NASDAQ:ARM)
Market Capitalization as of September 13: $151.43 billion
Number of Hedge Fund Holders: 38
Arm Holdings (NASDAQ:ARM) is a semiconductor IP (Intellectual Property) and software design company whose primary business is the design of central processing unit cores that implement the ARM architecture family of instruction sets. It designs and licenses the underlying technology for microprocessors, which are used in a wide range of devices, including smartphones, tablets, laptops, and embedded systems.
FQ1 2025 revenue grew 39% year-over-year to $939 million, the highest quarterly revenue to date and exceeded the company’s guidance. The earnings per share were $0.40, also beating Street estimates by $0.05. Investors have positive sentiments towards the company as we see that is it held by 38 hedge funds, as of June 30.
Licensing revenue increased 72%, while royalty revenue rose 17%. The FQ1 royalty revenue growth was fueled by continued Armv9 adoption and a recovery in the smartphone market, with smartphone royalty revenue increasing over 50% year-over-year despite only a mid-single-digit rise in units sold. Additionally, the company is gaining market share in automotive and cloud services, although challenges persist in IoT and networking equipment due to ongoing inventory corrections in the industrial sector.
The company’s recent advancements, including the launch of the Axion processor and Ethos-U85 for edge AI, highlight its strong position in the rapidly growing AI market. The introduction of Windows on Arm PCs and ongoing demand for compute subsystems across mobile, cloud, and automotive sectors further solidify its role as a leader in the tech ecosystem.
With a vast network of over 20 million software developers and a robust software ecosystem, Arm Holdings (NASDAQ:ARM) is well-equipped to drive future growth and innovation in AI applications.
3. Gitlab Inc. (NASDAQ:GTLB)
Market Capitalization as of September 13: $8.69 million
Number of Hedge Fund Holders: 39
Gitlab Inc. (NASDAQ:GTLB) is an open-core company that operates a DevOps software package (under the name of GitLab) that can develop, secure, and operate software. This platform helps software development teams manage the entire development lifecycle, from planning and coding to testing and deployment.
GitLab’s DevSecOps platform is designed to enhance collaboration among developers, security experts, and operations teams, improving software quality and security while reducing delivery times. With the integration of AI, it enables enterprises to achieve results beyond code generation.
GitLab Duo has shown impressive productivity gains, including a 90% reduction in toolchain operation time and 50% faster lead times and vulnerability detection. Notable clients like Barclays and F5 are adopting GitLab Duo, reflecting a growing trend among large enterprises to use AI for improved developer experiences and outcomes.
Gitlab Inc. (NASDAQ:GTLB) was recognized as a Leader in the inaugural 2024 Gartner Magic Quadrant for AI Code Assistants. Additionally, it maintained its Leader status in the 2024 Magic Quadrant for DevOps Platforms for the second consecutive year.
Second quarter revenue rose 30.81% year-over-year to $182.58 million, fueled by new clients like Delaware North and Guild Mortgage, along with growth from existing customers. 39 hedge funds together hold 5,076,668 shares in the company as of Q2 2024. The largest stake amounts to $252,411,933 by HMI Capital.
The company is well-positioned to capitalize on the rising demand for AI in software development, with Gartner predicting that AI adoption in platform engineering teams will soar from 5% to 40% by 2027.
Baron Discovery Fund stated the following regarding GitLab Inc. (NASDAQ:GTLB) in its Q2 2024 investor letter:
“We are huge believers in the practical uses of AI, and we have several investments in companies that adapt AI models to enhance their products and services. These include companies like GitLab Inc. (NASDAQ:GTLB), SentinelOne, Inc., and Couchbase, Inc., which were among our top detractors at one point in the second quarter (GitLab and SentinelOne recovered significantly in the last week of the quarter). As of the second quarter at least, the market has just not been ready to reward AI companies beyond those providing “picks and shovels.” This led to all three of these companies trading at or near all-time low valuation levels during the quarter. Nevertheless, we believe that in the coming quarters the market will broaden its level of interest from AI hardware to “adaptive AI” investments like GitLab, SentinelOne, and Couchbase. In that scenario, all three of these stocks have significant upside potential.
GitLab is a subscription software company that enables enterprise software developers to develop new software applications rapidly and securely for their firms. GitLab uses AI to help with code suggestions, to check for holes in security, and to automate collaboration among the many developers within an enterprise. GitLab recently launched a product called Duo that we believe will provide revenue upside for the company and enhance the competitiveness of their product of offerings. SentinelOne is a cybersecurity company that provides endpoint protection (a much more advanced version of legacy “anti-virus” software) both at customers’ physical sites and in the cloud. It uses AI to detect anomalous behavior on the network and to automate the remediation of the security flaws that led to the intrusion. Both companies are recurring revenue entities, with high gross margins (78% for SentinelOne and 90% for GitLab) and are growing rapidly (revenue growth of 25% or more). Yet both are trading at or near all-time low valuation levels. GitLab shares dropped 14.7% in the quarter despite raising full-year revenue and earnings guidance. This was partly due to a health issue with the CEO (cancer recurrence which he believes is very treatable). We see GitLab revenues growing at a compounded rate of 26% through 2028 with free cash flow growing five-fold over current levels. Again, we see the stock doubling over this time.”
2. Toast Inc. (NYSE:TOST)
Market Capitalization as of September 13: $14.66 billion
Number of Hedge Fund Holders: 43
Toast Inc. (NYSE:TOST) is a cloud-based restaurant management software company that provides an all-in-one point-of-sale (POS) system built on the Android operating system, helping with inventory management and employee scheduling.
With ~13% market share in US restaurants, the company has a significant opportunity to scale up. It’s also expanding its Total Addressable Market (TAM) into key international markets, enterprise chains, and food and beverage retail. Since launching its digital storefront suite, ~30% of locations have upgraded to the Pro tier, which includes a new website product that enhances their online presence.
In Q2, it achieved a record 8,000 net new locations, resulting in higher productivity and faster market share gains, especially in the top 10 flywheel markets, where the company saw 50% more wins compared to non-flywheel markets.
A notable example is Bizoria, a fast-casual concept in Greater Atlanta, which switched to Toast Inc. (NYSE:TOST) and increased revenue by 25% after integrating the POS terminals with self-ordering kiosks and kitchen display systems.
Overall, this quarter generated a revenue of $1.24 billion, up 26.99% year-over-year. 43 hedge fund holders are long in the company and the highest held stake amounts to $468,347,742 by Durable Capital Partners.
The company focuses on prioritizing enhancing its offerings with products and experiences that resonate with customers. The platform serves all restaurant stakeholders, creating value by supporting new revenue streams and simplifying operations. These factors position the company for growth and make it a top new tech stock to buy now.
Here is what Baron Opportunity Fund has to say about Toast, Inc. in its Q3 2021 investor letter:
“Toast, Inc. is a cloud-based end-to-end technology platform purpose-built for the restaurant industry. Its platform provides a comprehensive suite of cloud software products and financial technology solutions to its customers to connect front-of-house with back-of-house operations across all customer channels. Toast’s core module is its point-of-sale software solution and requires all customers to use Toast as their payment processor. Customers then have the option to bundle or add-on additional modules across operations, digital ordering and delivery, marketing and loyalty, team management, and back office. Toast today powers 48,000 restaurants within the 860,000 U.S. restaurant industry, largely focusing on small- and medium-sized (“SMB”) restaurant customers (generally fewer than 10 locations but up to 50), with some larger enterprise customers as well. Toast is the clear market leader in SMB restaurant technology with the best product offering and only full, end-to-end platform. We believe that as restaurants continue to invest in technology at an accelerated pace emerging from COVID, Toast will be a big beneficiary given its leading market position and best-in-class product. At less than 6% penetration of U.S. restaurants and 3% penetration of its $15 billion recurring-revenue TAM, Toast has a long runway for growth by signing on additional locations to the platform and increasing the attach rate of its value-add modules. Only 54% of customers today use 4 or more of Toast’s 10-plus modules, each of which provide significant value to the customer and would drive Toast’s recurring revenue stream higher.”
1. Core Scientific Inc. (NASDAQ:CORZ)
Market Capitalization as of September 13: $2.68 billion
Number of Hedge Fund Holders: 53
Core Scientific Inc. (NASDAQ:CORZ) is a leading provider of blockchain infrastructure and hosting services, specializing in powering Bitcoin mining operations, and offering data center space, computing power, and energy solutions to cryptocurrency miners. It is recognized as the first digital asset miner in North America to achieve operating capacities of 100, 250, and 500 megawatts.
The company announced a contract with CoreWeave to lease a 16-megawatt data center in Austin for high-performance computing (HPC) hosting, which was delivered over 30 days ahead of schedule, with revenue generation commencing in the second quarter of 2024.
Core Scientific Inc. (NASDAQ: CORZ) reported a successful second quarter, earning $141.10 million in revenue, up 11.18% year-over-year. $5.5 million of this revenue came from HPC hosting revenue at the Austin data center. Management anticipates Austin data center margins to improve over time to between 35% and 40%.
In Q2, revenue from bitcoin mining rose by 14% year-over-year, primarily from a 134% increase in the price of bitcoin and an increase of 28% in our self-mining hash rate, which was due to the deployment of approximately 19,000 additional new-generation self-mining units. However, the number of bitcoins earned decreased by 52% because of the Bitcoin halving event and heightened competition.
The majority of the company’s revenue comes from bitcoin mining, and it is expanding into high-performance computing, which could generate nearly $6.7 billion in revenue over the next 12 years.
Core Scientific’s strong position in digital infrastructure positions it well for future growth, with 53 hedge funds holding long positions in the company. A notable achievement was the mandatory conversion of convertible notes, which removed $260 million in debt from the balance sheet, strengthening the company’s financial position.
While we acknowledge the growth potential of Core Scientific Inc. (NASDAQ:CORZ), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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