In 2024, the S&P 500 IT Sector Index outperformed the broader S&P 500 Index, rising approximately 36% compared to a 23% increase in the latter. This performance was underpinned by emerging trends and innovations, particularly generative AI (GenAI) and the huge investments that went into creating the infrastructure to support the growth of such technologies.
According to Gartner, the year 2025 might see a further uptick in investments. In its January 21, 2025 report, Gartner forecasts Worldwide IT spending to grow 9.8% year-over-year in 2025 to total $5.61 trillion. Among the segments, data center systems, devices, and software are projected to see double-digit growth in 2025 primarily due to GenAI hardware upgrades.
While increasing investment is a positive sign, John-David Lovelock, distinguished VP Analyst at Gartner, shared the complex intricacies of these investments in the report:
“While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending. This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations.
IT services companies and hyperscalers account for over 70% of spending in 2025. By 2028, hyperscalers will operate $1 trillion dollars’ worth of AI optimized servers, but not within their traditional business model or IaaS Market. Hyperscalers are pivoting to be part of the oligopoly AI model market.”
As indicated by these forecasts, technology continues to remain an exciting space in 2025. Now, let’s take a look at the 15 hot tech stocks to buy right now.
Our Methodology
To shortlist the 15 hot tech stocks to buy, we screened companies with a market capitalization of at least $2 billion, more than 20% share price gains in the last 6 months and a potential upside of at least 20%. The stocks were then arranged in ascending order of their potential upside to arrive at the final list. We also included the number of hedge fund holders for each company based on hedge fund data from Insider Monkey’s database.
Note: all pricing data is as of market close on February 4.
At Insider Monkey we are obsessed with 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).
15. Salesforce Inc. (NYSE:CRM)
Upside Potential: 21%
Number of Hedge Funds: 116
Salesforce, Inc. (NYSE:CRM) is a prominent cloud-based software firm specializing in customer relationship management (CRM) solutions. The company provides a comprehensive suite of cloud-based applications for sales, service, marketing, and analytics, enabling businesses to connect with their customers in more meaningful ways. Its platform is designed to help organizations streamline their operations, enhance customer engagement, and drive growth through data-driven insights.
Salesforce, Inc. (NYSE:CRM) is heavily investing in AI and machine learning to enhance its services and deliver more personalized customer experiences. In recent years, the company has made strategic acquisitions such as Tableau, Slack, and Mulesoft, which have bolstered its position in the collaboration, data visualization, and analytics space. The company will continue to benefit from the increasing demand for cloud-based solutions and digital transformation initiatives across various industries. It remains optimistic about its Agentforce platform, believing that AI agents can help close deals rapidly.
During the World Economic Forum in Davos, the company announced plans to invest $500 million in Argentina over the next five years to support the country’s AI growth vision. On this investment, CEO Marc Benioff stated:
“We’re excited to invest in Argentina to support AI innovation, digital transformation, and workforce development with our Agentforce digital labor platform. We are entering a new era where autonomous agents can be scaled to provide a workforce without limits as humans and agents work together to drive customer success.”
14. The Trade Desk Inc. (NASDAQ:TTD)
Upside Potential: 22%
Number of Hedge Funds: 42
The Trade Desk Inc. (NASDAQ:TTD) offers a self-service, cloud-based ad-buying platform for digital advertising, enabling customers to plan, manage, optimize, and measure data-driven digital marketing campaigns across various channels, including video, display, audio, digital-out-of-home, and social media. Its clients include advertising agencies, advertisers, and other service providers for agencies or advertisers. The company generates revenue by charging clients a platform fee based on a percentage of the client’s total spend on advertising, as well as through providing data and other value-added services and platform features.
The Trade Desk Inc. (NASDAQ:TTD) distinguishes itself with its technology and data analytics capabilities. Through its ‘Koa’ predictive algorithmic tools, the company utilizes artificial intelligence to process complex data sets and make recommendations for campaign optimizations, maximizing benefits for its clients. It is also well-positioned to capitalize on the shift toward digital advertising, which is anticipated to continue growing as brands increasingly redirect budgets away from traditional media. According to the company’s Q3 2024 investor presentation, management is targeting an addressable market of $900 billion in total global ad spending.
The investment management company, Rowan Street Capital, mentioned the following regarding The Trade Desk Inc. (NASDAQ:TTD) in their Q4 2024 investor letter:
“Looking ahead, TTD is expected to grow its revenues, earnings, and free cash flow at rates north of 20%. While the stock’s current valuation is lofty and reflects significant enthusiasm for the company’s long runway for growth, we believe its strong fundamentals will drive solid returns over time. Even if valuation multiples were to compress, which we expect they might, we still anticipate a solid return from our position—potentially doubling our investment over the next five years.”
13. Oracle Corp. (NYSE:ORCL)
Upside Potential: 22%
Number of Hedge Funds: 91
Oracle Corp. (NYSE:ORCL) is a leading provider of cloud applications, platform services, and engineered hardware systems. The company holds a significant market share in database management systems and offers a wide range of enterprise solutions, including Oracle Cloud Infrastructure (OCI), data management, and enterprise resource planning (ERP) software. Oracle’s cloud and license business encompasses key technologies like Oracle Database and MySQL, which are widely utilized across various industries.
Oracle Corp. (NYSE:ORCL) is aggressively expanding its cloud offerings, positioning itself as a formidable player in the cloud infrastructure market. The company has reported significant increases in cloud revenue, driven by the rising demand for cloud services and applications. The integration of AI and machine learning into Oracle’s cloud solutions is expected to enhance its offerings, making it an attractive choice for businesses modernizing their IT infrastructure. Additionally, Oracle is expanding its global data center footprint to meet growing customer demands and is poised to benefit from the $500 billion ‘Project Stargate,’ which aims to position the company as a leader in AI compute.
In January 2025, Oracle Corp. (NYSE:ORCL) announced plans to enhance its global cloud infrastructure by adding eight new cloud regions in North America and Asia over the next 12 months. The company will also introduce new capabilities for ‘Oracle Database@Google Cloud’ to increase customer value. Furthermore, it plans to double data center capacity in key regions like London, Frankfurt, and Ashburn to meet increasing demand, reflecting its commitment to expanding its cloud services and infrastructure.
12. Clearwater Analytics Holdings Inc. (NYSE:CWAN)
Upside Potential: 23%
Number of Hedge Funds: 18
Clearwater Analytics Holdings Inc. (NYSE:CWAN) provides cloud-based investment accounting and reporting solutions. The company specializes in delivering comprehensive accounting, data, advanced analytics, and highly-configurable reporting for institutional clients, including asset managers, insurance companies, and corporations. Clearwater’s platform automates the aggregation, reconciliation, validation, and reporting of investment data, enabling clients to gain real-time, on-demand insights into their portfolios. As of Q3 2024, the platform aggregates and normalizes data on over $7.3 trillion of global invested assets for over 1,300 clients.
Clearwater Analytics Holdings Inc. (NYSE:CWAN)’s innovative technology and strong customer base lay a solid foundation for growth. The increasing regulatory requirements for transparency in investment reporting further enhance the company’s value proposition. Currently, the company generates 80% of its revenue from the U.S. market, and expansion into new markets is expected to drive significant revenue growth.
On January 13, 2025, the company announced the acquisition of Enfusion Inc. (NYSE:ENFN) for $1.5 billion. With its strong position in the hedge fund and asset management markets, Enfusion is expected to accelerate Clearwater’s aim of building a front-to-back platform for the entire investment lifecycle. The deal not only expands Clearwater Analytics Holdings Inc. (NYSE:CWAN)’s addressable market (around a $2 billion+ opportunity in hedge funds) but will also increase its geographical reach in Europe and Asia. Post the news, a Morgan Stanley analyst upgraded the company to Overweight from Equal Weight, raising his price target to $34 from $30, calling the acquisition a “transformational step that makes the front-to-back opportunity a reality.”
11. PAR Technology Corp. (NYSE:PAR)
Upside Potential: 25%
Number of Hedge Funds: 24
PAR Technology Corp. (NYSE:PAR) develops and markets products and software that help hospitality operators worldwide to better manage finances, materials, personnel, and the guest experience. Its product and service offerings include point-of-sale (PoS) systems, customer engagement and loyalty programs, digital ordering and delivery solutions, operational intelligence technologies, and payment processing services. Currently, over 100,000 restaurants utilize its software, and the company has deployed 500,000 terminals globally.
PAR Technology Corp. (NYSE:PAR) stands out by offering a diverse range of hardware products and a unified technology platform that provides integrated solutions and advanced data insights. The increasing use of technology in the hospitality and retail sectors is driving demand for the company’s products. In early January 2025, PAR Technology acquired Delaget LLC, a leading provider of restaurant analytics and business intelligence solutions, for $132 million. Delaget boasts an impressive portfolio, servicing over 30,000 locations and more than 125 brands. Savneet Singh, the company’s CEO and President, remarked:
“The acquisition of Delaget marks another strategic milestone in PAR’s mission to build the industry’s most comprehensive food service platform. Delaget’s analytics capabilities perfectly complement our Operator Cloud solution, while offering immediate value to our customers through enhanced back-office capabilities, delivery operations, and data-driven insights. Our combination will help restaurant operators make better decisions, reduce costs, and drive operational excellence in real-time. Access to the Delaget product suite will accelerate development timeframes of the PAR Data Platform, a major initiative that unites data across a restaurant’s tech stack to provide unparalleled guest and operational insights.”
10. Onto Innovation Inc. (NYSE:ONTO)
Upside Potential: 27%
Number of Hedge Funds: 34
Onto Innovation Inc. (NYSE:ONTO) designs, develops, manufactures, and supports process control, inspection, and metrology tools for the semiconductor industry. Its products are primarily utilized by silicon wafer manufacturers, integrated circuit (IC) fabricators, and advanced packaging manufacturers. Leveraging its extensive technology, the company specializes in creating advanced equipment and software that enhance semiconductor device manufacturing processes.
In mid-January 2025, Cantor Fitzgerald began coverage of Onto Innovation Inc. (NYSE:ONTO) with an Overweight rating and a price target of $250, signifying a potential upside of 25% from the closing price on February 4. Around the same time, an analyst from Needham also listed the stock as a Top Pick in Semi Equipment for 2025, although he marginally reduced the price target to $220. The analyst highlighted concerns about the current semiconductor upcycle’s weakness and a possible downturn in the second half of 2026. Nonetheless, he believes that due to its exposure to TSMC and HBM packaging, and relatively no exposure to China, Onto Innovation Inc. (NYSE:ONTO) is well-positioned to withstand these challenges.
9. Coherent Corp. (NYSE:COHR)
Upside Potential: 28%
Number of Hedge Funds: 51
Coherent Corp. (NYSE:COHR) is a developer and manufacturer of engineered materials, networking products, optoelectronic components, and optical and laser systems for the industrial, communications, electronics, and instrumentation markets. The company holds a strong position in the optical communications market, particularly with its innovative solutions for data centers, such as datacom optical transceivers.
In its Q1 2025 (November 2024) earnings presentation, the company envisaged an aggregate addressable market of $64 billion across its four major end-markets with Industrial and Communications accounting for around $22 billion each. The Q1 results were robust with revenue rising 28% year-over-year to $1.35 billion and adjusted gross margin improving by 290 basis points to 37.7%. Analysts remain broadly positive on the company as they still expect an average upside of 28% from current levels. On January 25, 2025, the Barclays analyst raised the price target for Coherent Corp. (NYSE:COHR) to $125 from $105 and reiterated his Overweight rating.
8. Clear Secure Inc. (NYSE:YOU)
Upside Potential: 30%
Number of Hedge Funds: 25
Clear Secure Inc. (NYSE:YOU) offers a secure identity verification platform that primarily focuses on enhancing the travel experience for consumers. The company employs top-tier biometric capture technology to streamline the identification process at airports and other venues, allowing users to bypass traditional security lines.
Clear Secure Inc. (NYSE:YOU) has established a significant physical presence both in the US and globally. Its services are designed to improve efficiency and security for both travelers and businesses, with applications extending beyond travel to include sports and entertainment venues. The company’s growth strategy aims to capitalize on the increasing demand for expedited security solutions in the travel and event sectors. By forming partnerships with major airlines and venues, the company has built a solid foundation for growth, and its subscription-based model offers potential for recurring revenue.
In its Q3 2024 results, Clear Secure Inc. (NYSE:YOU) reported strong growth trends, with Total Cumulative Platform Uses reaching 220.4 million (+32% year-over-year), driven primarily by CLEAR Plus verifications and an increasing contribution from CLEAR Verified. Consequently, total revenue for the quarter grew 23.7% to $198.4 million, and total bookings rose by 18.7%. In her shareholder letter for the third quarter, the company’s CEO, Caryn Seidman Becker, expressed optimism about its outlook for 2025 and said:
“Looking ahead to 2025, we are excited by the multi-faceted growth opportunities across our secure identity network as we continue to drive bookings, expand margins, and accelerate free cash flow. With a strong foundation in place and a clear vision for the future, CLEAR is well-positioned to continue delivering value for our members, partners, and shareholders.”
7. Extreme Networks Inc. (NASDAQ:EXTR)
Upside Potential: 33%
Number of Hedge Funds: 29
Extreme Networks Inc. (NASDAQ:EXTR) delivers cloud-driven networking solutions that provide high-performance connectivity and network management for enterprises, service providers, and public sector organizations. The company also produces network switches, routers, and wireless access points, which are engineered to offer high-speed connectivity, network resilience, and scalability, serving organizations with both on-premises and cloud-based infrastructure. For data centers, Extreme Networks Inc. (NASDAQ:EXTR) offers a variety of solutions including high-density network switches, data center interconnects, and load balancing solutions that ensure high availability and low-latency connections for mission-critical applications.
Cloud computing, data centers, and enterprise network modernization are projected to drive long-term demand for the company’s networking and infrastructure solutions. Extreme Networks Inc. (NASDAQ:EXTR) continues to broaden its international reach, particularly in Asia-Pacific and Europe, where the demand for networking and cloud solutions is rapidly growing. In the latest earnings comments, management emphasized a robust growth trajectory in its data center solutions, highlighting high-performance switches and SD-WAN offerings, which have been especially popular among large enterprises and cloud providers.
6. Lyft Inc. (NASDAQ:LYFT)
Upside Potential: 35%
Number of Hedge Funds: 51
Lyft Inc. (NASDAQ:LYFT) operates a ride-sharing platform in cities across the United States and select cities in Canada, offering multimodal transportation services through its mobile app. The company connects drivers with riders, providing a variety of services, including standard rides, shared rides, and Lyft XL for larger groups.
Lyft Inc. (NASDAQ:LYFT) has established a strong brand presence, focusing on affordability, safety, reliability, efficiency, and community engagement. The company is also investing in autonomous vehicle technology and expanding its bike and scooter sharing services. Lyft is well-positioned to benefit from the ongoing shift towards shared mobility as consumers increasingly seek convenient and cost-effective transportation solutions. Its strategic partnerships with various businesses to promote sustainable transportation options, such as electric vehicles, present significant growth opportunities. In November, the company announced plans to partner with Mobileye, May Mobility, and Nexar for multiple autonomous vehicle (AV) partnerships to connect the Lyft community with future AV rides. On these plans, David Risher, CEO of Lyft, stated:
“Lyft’s aim is to connect AVs, drivers, riders, and partners to create new opportunities for all. Our rideshare network will continue to evolve as millions of people will have the opportunity to earn billions of dollars whether they choose to drive, put their AVs into service, or both.”
5. MongoDB Inc. (NASDAQ:MDB)
Upside Potential: 45%
Number of Hedge Funds: 49
MongoDB Inc. (NASDAQ:MDB) is a developer data platform company that provides modern database platforms and related services for developers. The company’s flagship product, MongoDB Atlas, is a fully managed multi-cloud developer data platform that allows organizations to build and scale applications quickly and efficiently. According to the company’s last annual report, IDC estimates the data management software market, the company’s primary market, is projected to grow from $94 billion in 2023 to approximately $153 billion in 2027, with a CAGR of 13%.
The investment management company, Montaka Global Investments, stated the following regarding MongoDB Inc. (NASDAQ:MDB) in their Q4 2024 investor letter:
“As a database provider for large production-ready applications, MDB has suffered of late because software developers have overwhelmingly focused on small, experimental AI-based ‘proof of concepts’ rather than production deployments. We expect this cycle to turn in 2025 and beyond, and its possible (though not certain) that demand for MDB accelerates materially.
There are strong arguments for why MDB should thrive in a world in which AI is infused into applications. These include – a) As one of the largest and well-established database offerings available for ‘unstructured data’, MDB should benefit from new AI applications on the basis that 80-90% of the world’s data is inherently unstructured. B) Relational databases (e.g. Oracle) that handle structured data that align to a fixed schema, lack the flexibility required to handle the rapid changes and evolutions that are taking place in AI. C) New AI coding agents can now automate the (previously too time consuming) transfers of data from a relational database to a more flexible MDB. Given MDB’s market share of the overall database market is only approximately 2% today, small changes in market share would likely translate into outsized percentage gains in MDB’s value.”
4. Core Scientific Inc. (NASDAQ:CORZ)
Upside Potential: 56%
Number of Hedge Funds: 58
Core Scientific Inc. (NASDAQ:CORZ) operates large-scale, dedicated facilities for digital asset mining and is a leading provider of blockchain infrastructure, software solutions, and services. The company utilizes its extensive fleet of computers (miners) to earn bitcoin for its own account and provides hosting services for large bitcoin mining customers.
As of December 31, 2023, Core Scientific Inc. (NASDAQ:CORZ) was one of the largest blockchain data center, digital asset mining, and hosting service providers in North America, with an average hourly operating power demand of approximately 592 megawatts (MW) for the year. The company is well-positioned to benefit from the growing demand for blockchain technology and the need for efficient and scalable mining operations as the cryptocurrency market continues to expand.
On February 5, 2025, the company released its production and operations update, reporting that it earned 256 bitcoins in January (compared to 291 in December 2024) from its owned fleet of miners. As of the end of the month, the company operated approximately 161,000 owned bitcoin miners, representing about 96% of the bitcoin miners operating in its data centers. The stock has a favorable view from analysts, with an upside potential of 48%. During the last week of January 2025, Keefe, Bruyette & Woods began coverage on Core Scientific Inc. (NASDAQ:CORZ) with an Outperform rating and a $22 price target.
3. MicroStrategy Inc. (NASDAQ:MSTR)
Upside Potential: 58%
Number of Hedge Funds: 25
MicroStrategy Inc. (NASDAQ:MSTR) is a business intelligence (BI) company that provides software and services for data analytics and visualization. The company’s enterprise analytics platform, MicroStrategy ONE, enables organizations to analyze vast amounts of data and derive actionable insights. Additionally, the company considers itself the world’s first bitcoin treasury company, using cash flows from its BI operating business as well as proceeds from equity and debt financings to accumulate bitcoins, which serves as its primary treasury reserve asset.
MicroStrategy Inc. (NASDAQ:MSTR)’s strategy is to buy and hold bitcoins indefinitely. Its investment in bitcoin has made it an attractive option for investors seeking exposure to digital assets. The company’s strategy of holding bitcoins as a primary treasury reserve asset aims to mitigate inflation risks and enhance shareholder value over the coming years. The company acquired 218,887 bitcoins for $20.5 billion in Q4 2024, and by the end of the December 2024 quarter, it held approximately 447,470 bitcoins with a market value of $46 billion (as of February 5, 2025).
Notably, on February 5, 2025, MicroStrategy Inc. (NASDAQ:MSTR) announced its rebranding and will henceforth do business under the name ‘Strategy’. Along with the rebranding, the company announced its Q4 2024 earnings, reporting a 3% year-over-year (YoY) increase in quarterly revenue. The company has been transitioning towards a subscription revenue model, showing strong (48% YoY) growth in subscription services revenue and a faster decline in license revenue (-18%). However, the primary focus remains on its Bitcoin strategy.
2. AST Spacemobile Inc. (NASDAQ:ASTS)
Upside Potential: 75%
Number of Hedge Funds: 18
AST Spacemobile Inc. (NASDAQ:ASTS) is an innovative satellite communications company focused on providing direct-to-smartphone connectivity through its advanced satellite network technology. The company’s technology leverages low earth orbit (LEO) satellites to deliver high-speed, reliable communication services, enhancing mobile connectivity. It aims to provide cost-effective, high-speed cellular broadband services using existing mobile devices to end-users who are outside of terrestrial cellular coverage, or in remote or underserved areas globally.
AST Spacemobile Inc. (NASDAQ:ASTS) is strategically positioned to take advantage of the growing demand for global mobile connectivity, particularly in regions lacking reliable service. The company’s unique approach of integrating satellite technology with existing mobile networks presents significant opportunities for partnerships with telecom operators. According to the company’s investor presentation in October 2024, around 90% of the earth’s surface is without cellular coverage and 5.6 billion mobile devices move in and out of coverage. The company foresees a $67 billion demand for satellite direct-to-device communications between 2023 and 2030.
1. Palo Alto Networks Inc. (NASDAQ:PANW)
Upside Potential: 132%
Number of Hedge Funds: 64
Palo Alto Networks Inc. (NASDAQ:PANW) is a leading cybersecurity company offering a comprehensive suite of security and zero-trust solutions designed to shield organizations from cyber threats. The company provides advanced firewalls, cloud-based security services, and endpoint protection, enabling businesses to secure their networks, applications, and data across various environments, including on-premises, cloud, and hybrid infrastructures.
With a strong emphasis on innovation, Palo Alto Networks Inc. (NASDAQ:PANW) incorporates artificial intelligence, machine learning, and automation into its security offerings to enhance threat detection and response capabilities. Its market capitalization currently stands at approximately $121 billion, underscoring its significant position in the cybersecurity industry. Palo Alto Networks Inc. (NASDAQ:PANW) aims to capture a larger share of the cybersecurity market, which is projected to grow substantially in the coming years. According to a report published by Statista in June 2024, the estimated cost of cybercrime may reach $15.6 trillion by 2029, up from $9.2 trillion in 2024. Thus, the company is well-positioned to benefit from the rising demand for cybersecurity solutions, driven by the increasing frequency and sophistication of cyberattacks.
On January 21, 2025, an analyst from Morgan Stanley raised the price target for Palo Alto Networks Inc. (NASDAQ:PANW) from $223 to $230 and maintained an Overweight rating. The analyst views the current valuation as a favourable entry point, given recent underperformance, and anticipates potentially larger deals and stronger market share gains for the company. The analyst also believes that the stock could double in 4-5 years, driven by platform deals and increased market share.
While we acknowledge the potential of PANW to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PANW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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