In this article, we will explore the 8 high-growth software stocks that are profitable in 2024.
The Software Industry: An Analysis
The software market is experiencing robust growth, driven by various trends and technological advancements. According to Precedence Research, the global software market size reached $659.17 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 11.8% during 2024 – 2034 to reach $2.24 trillion by the end of the forecast period. In 2023, the North American region led the software market, holding a substantial share of 44%. The Asia-Pacific region is expected to witness significant growth during the forecast period.
A key factor influencing the market is the rise of artificial intelligence (AI). AI technologies are being integrated into software solutions to enhance efficiency and automate repetitive tasks. A study from Salesforce reveals that 85% of IT leaders expect AI to boost developer productivity over the next three years. This expectation underscores the growing recognition of AI’s role in streamlining workflows and optimizing software performance.
Another significant trend is the shift towards cloud-based software. Companies are migrating from traditional on-premises solutions to cloud services due to their flexibility, scalability, and cost-effectiveness. This transition allows businesses to access applications remotely and across various devices, which has become crucial in today’s digital landscape.
The 2024 AlgoSec State of Network Security report highlights a notable shift towards multi-cloud environments. The research, based on surveys conducted in H2 of 2022 and 2023, evaluated major players like AWS and Microsoft Azure. It indicates that security, continuity, and compliance are key factors driving organizations to adopt cloud platforms. While cloud adoption is growing, Azure remains the most popular platform, with AWS rapidly gaining ground.
The report also reveals that the move to remote work has significantly boosted Software-Defined Wide Area Networks (SD-WAN) deployment, dropping the percentage of organizations without SD-WAN from 55.2% in 2022 to 34% in 2023. Secure Access Service Edge (SASE) has become a popular solution for organizations by consolidating security functions into a unified cloud service. Additionally, firewall implementation has surged, with only 7.1% of respondents reporting no firewalls in 2023, down from 28.4% in 2022. This trend reflects a growing focus on securing cloud networks against external threats.
With an overview of the global software market in mind, let’s take a look at the 8 high-growth software stocks that are profitable in 2024.
A close-up view of an AI-platform software code running on a monitor.
Methodology
To compile our list of the 8 high-growth software stocks that are profitable in 2024, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the top 50 largest software companies by market cap.
To narrow down our list to high-growth software stocks, we focused on companies with a compound annual growth rate (CAGR) in net revenue exceeding 18% over the past 5 years.
Next, we focused on profitability. From this initial list of high-growth software stocks, we narrowed our choices to stocks that had positive trailing twelve-month (TTM) net income and stocks that have grown their net income positively over the past 5 years.
To ensure the reliability of our findings, we consulted reputable sources such as SeekingAlpha, which provided insights into the net income CAGR and revenue CAGR over the past five years, and YCharts, which offered information on TTM net income.
Finally, from this list of high-growth software stocks that met our criteria, we focused on the top 8 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 8 high-growth software stocks that are profitable in 2024 are ranked below in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? 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).
8 High Growth Software Stocks That Are Profitable In 2024
8. Zoom Video Communications Inc. (NASDAQ:ZM)
TTM Net Income: $875.37 Million
5-Year Net Income CAGR: 132.61%
5-Year Revenue CAGR: 58.14%
Number of Hedge Fund Holders: 39
Zoom Video Communications Inc. (NASDAQ:ZM) is a software and communications technology company best known for its video-conferencing application, Zoom. Recently, the company launched Zoom Workplace, an AI-powered collaboration platform designed to enhance modern work environments. This platform aims to streamline communication, boost employee engagement, and improve productivity by integrating various tools such as meetings, team chat, and phone services into a single interface.
The company is actively enhancing its offerings. Recently, Zoom Video Communications Inc. (NASDAQ:ZM) launched a new Zoom Webinar feature that can accommodate up to 1 million attendees, revolutionizing the way organizations can connect with huge audiences and showcasing the clear scalability advantage.
Additionally, Zoom Video Communications Inc. (NASDAQ:ZM) is experiencing a surge in the adoption of its advanced Contact Center packages as businesses increasingly leverage its AI capabilities to improve agent performance. Notably, all of the company’s top ten Contact Center wins in its Q2 2025 involved displacing competitors. This success underscores how well Zoom’s offerings meet customer needs and validates its strategy of providing integrated solutions for both customer and employee experiences.
As Zoom continues to expand its capabilities, it is preparing to enter the next phase of AI-enabled work, where AI Companion will simplify workflows, provide contextual insights, and perform tasks to further streamline operations.
At the end of the second quarter of fiscal year 2025, Zoom Video Communications Inc. (NASDAQ:ZM) had 3,933 customers generating over $100,000 in trailing 12 months revenue, which is a 7.1% increase from the same time last year. The company reported total revenue of $1.16 billion for the quarter, reflecting a 2.1% rise year-over-year. Enterprise revenue reached $682.8 million, up 3.5% compared to the previous year. Additionally, operating cash flow improved significantly, totaling $449.3 million, which is a 33.7% increase from the same quarter last year.
As one of the most profitable high-growth stocks, Zoom Video Communications Inc. (NASDAQ:ZM) has managed to grow its revenue at a compound annual growth rate (CAGR) of 58.14% over the past five years, while its net income has increased at a CAGR of 132.61% during the same period.
Given its consistent innovations and impressive financial results, Zoom Video Communications Inc. (NASDAQ:ZM) stands out as an attractive investment opportunity.
7. Fortinet Inc. (NASDAQ:FTNT)
TTM Net Income: $1.31 Billion
5-Year Net Income CAGR: 28.51%
5-Year Revenue CAGR: 23.11%
Number of Hedge Fund Holders: 42
Fortinet Inc. (NASDAQ:FTNT) is a cybersecurity company that develops and sells software and network security solutions. The company’s portfolio of more than 50 enterprise-grade products is the largest integrated offering available, delivering protection to networks, users, and data from continually evolving threats.
The company is actively pursuing its strategy to lead in the rapidly growing Unified SASE (Secure Access Service Edge) and Security Operations markets while also increasing its market share in Secure Networking. The company aims to differentiate itself as a SASE leader, being the only vendor recognized in multiple Gartner Magic Quadrant reports for both Single-Vendor SASE and various network security categories. By developing all SASE functions organically within a single operating system, Fortinet Inc. (NASDAQ:FTNT) offers a comprehensive stack that includes its market-leading SD-WAN, ZTNA, Secure Web Gateway, CASB, Firewall, and more, enhancing user experiences while securing access to both on-premise and cloud applications.
Recently, Fortinet Inc. (NASDAQ:FTNT) acquired Next DLP, a cloud-native data protection platform that will enable the company to enter the enterprise DLP market and enhance its SASE solutions.
The company is also enhancing its Secure Ops portfolio by leveraging over a decade of AI experience to provide advanced analytics and sensors that continuously monitor access activities for signs of cyber threats. In August, Fortinet Inc. (NASDAQ:FTNT) acquired Lacework, a cloud security and cloud-native application protection platform, which significantly broadens the company’s security offerings and increases the company’s total addressable market by $10 billion. This acquisition, combined with the integration of AI-driven solutions, positions Fortinet to deliver comprehensive protection across network, cloud, and endpoint environments.
From its acquisitions of Next DLP and Lacework, Fortinet Inc. (NASDAQ:FTNT) will gain over 900 new customers along with skilled sales and engineering teams. This expansion will enhance the company’s position in the market.
Fortinet Inc. (NASDAQ:FTNT) has seen impressive growth over the last five years, with revenue increasing at a compound annual growth rate (CAGR) of 23.11% and net income rising at a CAGR of 28.51%.