In this article, we will discuss the 8 Tech Stocks with Biggest Upside Potential According to Analysts.
In the opening months of 2024, the information technology and communication services sectors aided the rest of the broader equities in the US. As per BNP Paribas Asset Management, while the performance of certain segments might seem overextended, such dynamic moves resulted in businesses delivering healthy fundamental results and guiding for continued improvement. Cutting-edge technologies are being used to bring about change throughout verticals such as healthcare, finance, manufacturing, and retail. The resulting benefits will improve productivity and efficiency, customer experiences, and profitability.
As of now, generative artificial intelligence (AI) continues to strongly impact several enablers and beneficiaries of this technology, with their stock prices similarly benefiting. Resultantly, the valuation multiples stretched, implying an acceleration in future earnings growth. The firm also believes that some of these companies are expected to meet or exceed the growth implied by their multiples, with others disappointing and experiencing a price correction.
The firm also believes that AI workloads remain the area of rapid growth which continues to contribute to the broader improvement in revenues from the cloud businesses. Some US tech giants, or hyperscalers, can be the obvious winners from this reacceleration. However, there remain numerous corollary beneficiaries possessing significant upside potential. Notably, networking software and equipment can be tagged as one area in which growth rebounds quicker than expected.
Trends Likely to Support Companies
Edge Computing and Platform Engineering are likely to be critical technologies to support companies in improving their profitability numbers. Edge computing tends to process data near the source or point of its generation to save bandwidth and decrease the response latency. This is important for applications requiring to process data proactively in real-time, like autonomous vehicles, industrial automation, and smart cities.
According to MarketsandMarkets, the global edge computing market should touch USD 15.7 billion by 2025, demonstrating a CAGR of ~34.1%. This growth is expected to be fueled by increased adoption of cloud-like agility, innovation, and flexibility in edge computing infrastructure. While the adoption of edge computing continues to be led by manufacturing, healthcare, and telecommunication industries, market experts believe that this demand will increase as a result of faster and more reliable data processing.
The next trend that is likely to revolutionize the technology space is Platform Engineering. This involves scalable and integrated platforms of technology through solutions catering to a vast set of applications. These solutions are the ones providing the base for developing software affordably. Gartner predicts that, by 2026, ~80% of large software engineering organizations will establish platform engineering teams as internal providers of reusable services, components, and tools for application delivery. This implies a rise from 45% in 2022. Therefore, Platform Engineering will help organizations scale their business operations and the overall support of other applications.
Software and IT Services Should Drive Growth
Gartner expects that global IT spending should grow 6.8% in 2024, reaching USD 5 trillion. The software and IT services segments will lead this growth and account for about half of the expected total spending. Cybersecurity should be one of the critical drivers of growth in the software segment. This comes after ~80% of technology executives told Gartner that they continue to plan to increase spending in this area as a result of concerns stemming from AI adoption which might increase vulnerabilities for IT security.
A close-up of a hand reaching out to touch a virtual animation, demonstrating the power of the company’s IoT technology.
Our methodology
To list the 8 Tech Stocks with Biggest Upside Potential According to Analysts, we conducted extensive research and sifted through several online rankings. After extracting the list of 20-25 stocks, we selected the following 8 tech stocks with biggest upside potential. Finally, we ranked the stocks according to their potential upside, as of October 4. We also mentioned the hedge fund sentiments around each stock, 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).
8 Tech Stocks with Biggest Upside Potential According to Analysts
8) Concentrix Corporation (NASDAQ:CNXC)
Expected Upside Potential: 44.54%
Number of Hedge Fund Holders: 25
Concentrix Corporation (NASDAQ:CNXC) is engaged in providing technology-infused customer experience (CX) solutions worldwide.
Market analysts believe that strategic shifts toward high-margin and transformative business should continue to aid Concentrix Corporation (NASDAQ:CNXC)’s long-term growth prospects. The company expects the launch of iX Hello, which is an LLM-agnostic generative AI productivity tool, is expected to enhance operational efficiency. Concentrix Corporation (NASDAQ:CNXC) plans to reduce net leverage to ~2.8 times adjusted EBITDA by year-end.
In a recent earnings call, the company highlighted that clients have been asking providers to assume upfront investments for transformation, which might result in enhanced margins over time. Concentrix Corporation (NASDAQ:CNXC)’s shift towards automation continues to occur faster than expected, with clients looking for quicker implementations.
Given the clear focus on technology, AI integration, and transformational business opportunities, Concentrix Corporation (NASDAQ:CNXC) has been positioning itself to tap higher-margin projects and deliver improved value to both its clients and shareholders. The company believes that its strategic direction and the potential for automation and consolidation should fuel future growth.
For FY 2024, Concentrix Corporation (NASDAQ:CNXC) expects reported revenue of between $9.591 billion – $9.641 billion and operating income of $611 million – $617 million. Robert W. Baird assumed coverage on shares of the company on 3rd October. The company gave an “Outperform” rating and a $70.00 target price.
Investment management company First Pacific Advisors recently released its first quarter 2024 investor letter. Here is what the fund said:
“Concentrix Corporation (NASDAQ:CNXC) is one of two top customer experience (CX) vendors globally. The company started managing call centers but has since evolved into a high-tech business process outsourcer (BPO) that also designs and manages customer-facing websites and apps, integrates the data, and optimizes a client’s customer interactions. The company was spun out from TD Synnex, another of the Fund’s core holdings, and we have always been impressed with the company’s innovation and growth. CX is a relatively new business model, and Concentrix has been rolling up smaller competitors. In March, 2023 they bought WebHelp, a leading European CX player, for $4.8B in cash and stock. We believe the WebHelp acquisition will help consolidate an industry where Concentrix and Teleperformance are the largest players.
On Jan. 24, 2024 Concentrix reported Fiscal 2023 earnings that included weak 1% – 3% organic growth guidance for 2024. The market’s current concern about the potential of artificial intelligence to disrupt Concentrix’ core call center business has resulted in the underperformance in the shares across the industry. Concentrix has three turns of debt from the Webhelp deal which will be a problem if earnings deteriorate quickly. But Concentrix now trades at less than five times adjusted EPS. We think, but don’t know, that Concentrix’ domain knowledge and integration into customers’ workflows make for meaningful switching costs. We have held on to our Concentrix shares but have not added to the position.”
7) Snowflake Inc. (NYSE:SNOW)
Expected Upside Potential: 48.19%
Number of Hedge Fund Holders: 69
Snowflake Inc. (NYSE:SNOW) offers a cloud-based data platform for various organizations in the US and internationally.
Wall Street analysts believe that the growth prospects of Snowflake Inc. (NYSE:SNOW) stem from favorable demand conditions for the DBMS software. Its base of customers’ workloads will mature, and together with significant switching costs, this should result in less volatile consumption revenue trends. Also, Snowflake Inc. (NYSE:SNOW) is expected to be helped by the sectoral tailwinds. The demand stems from the workloads pivoting to cloud environments. Therefore, the company should accumulate a larger share of the overall database management system market.
The focus on driving consumption via sales force compensation is expected to have a positive impact in 2026. Snowflake Inc. (NYSE:SNOW)’s competitive edge in analytics, data engineering, and Al should fuel topline growth moving forward. Furthermore, analysts expect that the company is well-placed to aid enterprises leveraging data to build newer-generation Al applications.
In a recent earnings call, the company highlighted that new capabilities Cortex AI and Iceberg are being adopted by well-established clients. Snowflake Inc. (NYSE:SNOW) is expecting a stable net revenue retention and is planning to accelerate sales force hiring.
Analysts at DA Davidson restated a “Buy” rating on the shares of Snowflake Inc. (NYSE:SNOW), issuing a $175.00 target price on 3rd October. Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform that is predominantly used for data analytics. The stock declined 16.4% as investors evaluated the impact of a recently announced CEO transition, an investment cycle driven by spend on AI, a cybersecurity incident, and a rapidly changing competitive environment. With GenAI capturing a larger portion of the public discourse, Snowflake’s positioning in the future data stack is under scrutiny by both investors and customers. We believe Sridhar Ramaswamy, the newly appointed CEO, can help the business more efficiently transition toward an AI-first world. While Databricks and other key competitors are presenting strong results, we believe Snowflake’s brand, existing customer base, and accelerating product innovation should allow it to continue to capture share in a relatively large and strategic market. Management continues to describe strong demand trends for its core data analytics, which is also demonstrated by the relatively healthy expansion rates among existing customers while new go-to-market initiatives can help grow the customer base further. Longer term, we remain excited about the Snowflake’s strategic opportunity as the data platform for its customers.”
6) DoubleVerify Holdings, Inc. (NYSE:DV)
Expected Upside Potential: 50.72%
Number of Hedge Fund Holders: 20
DoubleVerify Holdings, Inc. (NYSE:DV) offers a software platform for digital media measurement, and data analytics in the US and internationally.
DoubleVerify Holdings, Inc. (NYSE:DV) continues to capitalize on the momentum from new partnerships and the closure of competing services such as Oracle’s Moat and Grapeshot, with expectations of revenue impact beginning from early 2025. Notably, Video impressions outpaced display impressions for the first time. This underscores the success of the Verify Everywhere strategy.
Wall Street analysts believe that DoubleVerify Holdings, Inc. (NYSE:DV) remains well-placed for long-term growth as a result of new partnerships, including Philip Morris, Bacardi, Panera, and others. The company sees healthy growth opportunities in social, CTV, retail media networks, and the open web. DoubleVerify Holdings, Inc. (NYSE:DV) remains confident in its near- and long-term growth, given its continued focus on expanding social measurement solutions and CTV verification. Its retail media supply side solutions witnessed more than 50% revenue growth and these are anticipated to maintain a healthy growth trajectory.
The company signed multiple new partners and customers, such as DailyMotion and Ziff Davis, which should boost growth in H2 2024. Market experts believe that, given its strategic focus on social and CTV metrics, together with a growing supply-side platform business, DoubleVerify Holdings, Inc. (NYSE:DV) remains well-capitalized on the dynamic digital advertising landscape.
Needham & Company LLC reiterated a “Buy” rating on the shares of DoubleVerify Holdings, Inc. (NYSE:DV), setting a price target of $33.00 on 17th September.
The London Company, an investment management company, released second-quarter 2024 investor letter. Here is what the fund said:
“Initiated: DoubleVerify Holdings, Inc. (NYSE:DV) – DV develops software platforms for digital media measurement, data, and analytics. DV sells a critical insurance-like product known as “ad verification,” designed to create transparency, eliminate fraud, and drive ad-spending optimization. Ad verification has reached a point of mass acceptance among digital ad buyers due to its measurable low cost/high reward value proposition. DV operates in a duopoly where it commands the leading market position (>50% market share), by focusing on product innovation rather than sales expansion. DV’s business should continue to benefit from secular tailwinds in digital advertising. Incremental revenue growth should be accretive to returns on capital, given the its high cash margins and minimal capex needs. We initiated our position following a pullback, allowing us to purchase an advantaged company growing at a double- digit rate, with high margins, at a market multiple.”
5) Freshworks Inc. (NASDAQ:FRSH)
Expected Upside Potential: 51.25%
Number of Hedge Fund Holders: 33
Freshworks Inc. (NASDAQ:FRSH) is a software development company, which offers software-as-a-service products worldwide.
Wall Street analysts remain optimistic about Freshworks Inc. (NASDAQ:FRSH)’s recent strategic moves, which include the acquisition of Device42. This acquisition enhances the company’s IT asset management offerings and the implementation of its AI product, Freddy Copilot. The company’s AI product approximately doubled its customer base and ARR from the previous quarter. Freshworks Inc. (NASDAQ:FRSH) has built in $11 million for the full year from Device42, and plans to transition it to a pure cloud offering by next year’s end.
Freshworks Inc. (NASDAQ:FRSH) remains focused on driving customer adoption and usage of its AI products in a bid to deliver value and accelerate growth. The company’s IT Service Management (ITSM) product is expected to act as a key growth driver. Also, the combination of Freshworks’ ITSM offering and Device42 should enhance the overall value proposition for customers. Analysts remain optimistic about the company’s strategic priorities and expect that Freshworks Inc. (NASDAQ:FRSH) remains well-positioned to seize the massive opportunity.
For Q3 2024, the company anticipates revenue in the range of $180.0 million – $183.0 million, reflecting a YoY growth of 17% – 19%. For the same period, it expects to report non-GAAP income from operations of $13.0 million – $15.0 million. Freshworks Inc. (NASDAQ:FRSH) rolled out a new data center in the UAE, powered by Amazon Web Services (AWS). The focus is to power global expansion and support job creation and digital skills development in the region.
Needham & Company LLC reaffirmed a “Buy” rating, setting a $20.00 target price on 31st July.
ClearBridge Investments, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“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.”
4) NICE Ltd. (NASDAQ:NICE)
Expected Upside Potential: 54.94%
Number of Hedge Fund Holders: 29
NICE Ltd. (NASDAQ:NICE) offers cloud platforms for AI-driven digital business solutions worldwide.
NICE Ltd. (NASDAQ:NICE) saw expansion in its market share as a result of increased demand for its CXone platform and AI solutions. The company remains on track to complete its $300 million share buyback program by Q3 2024 end and expects continued revenue growth for the remainder of the year. It expects revenue distribution to be consistent with prior years, with possible acceleration in Q4 2024 because of seasonality.
While NICE Ltd. (NASDAQ:NICE) expects strong cash flow generation and a significant rise in FCF for the year, the company also sees continued growth in cloud margins and profitability. Significant investments and increased spending should help increase the demand for AI. Since Cloud migration remains more advanced in SMBs, NICE Ltd. (NASDAQ:NICE) anticipates that larger enterprises will also follow.
Long-term investments focused on architecture and solutions should continue to contribute to the market share. NICE Ltd. (NASDAQ:NICE)’s focus on AI and strategic investments seems to be paying off, with robust bookings and customer adoption. For Q3 2024, the company expects non-GAAP total revenues to be between $676 million – $686 million, exhibiting 13% growth YoY at the midpoint. Also, non-GAAP fully diluted EPS should be between $2.62 – $2.72.
JMP Securities reissued a “Market outperform” rating, giving a $300.00 target price on the shares of NICE Ltd. (NASDAQ:NICE) on 16th August.
Parnassus Investments, an investment management company, released the second quarter 2024 investor letter. Here is what the fund said:
“NICE Ltd. (NASDAQ:NICE) reported first-quarter earnings that exceeded consensus estimates. However, the stock fell on news the company’s CEO plans to leave at the end of the year and on concerns that its contact center software would be replaced by generative AI. We believe the concerns are overblown and anticipate instead that the firm will integrate AI features successfully.”
3) Nextracker Inc. (NASDAQ:NXT)
Expected Upside Potential: 69.45%
Number of Hedge Fund Holders: 39
Nextracker Inc. (NASDAQ:NXT) offers solar tracker and software solutions for utility-scale and distributed-generation solar projects in the US and internationally.
Nextracker Inc. (NASDAQ:NXT)’s recent acquisitions of Ojjo and Solar Pile International should enhance its geotechnical capabilities. Also, the company’s focus on domestic manufacturing in the US should be underscored by the planned delivery of a product having 100% domestic content in early 2025. Wall Street analysts remain optimistic about the company’s backlog, with 80% anticipated to be fulfilled over the upcoming 8 quarters. Nextracker Inc. (NASDAQ:NXT) remains optimistic about the role of AgriPV and grid-enhancing technologies in the renewable energy sector. The company has been responding to supply chain cost inflation through hybrid strategy and design innovations.
Irrespective of the US election outcome, Nextracker Inc. (NASDAQ:NXT) is expecting continued growth, with acquisitions and domestic manufacturing to be the primary drivers. The analysts believe that the company’s focus on domestic content and innovations in AgriPV, together with the strategic use of the 45x manufacturing credit, places it well amidst increased supply chain costs.
In Q1 2025, Nextracker Inc. (NASDAQ:NXT) saw healthy execution, characterized by strong demand dynamics for solar trackers in both the US and international markets. For FY 2025, the company expects revenue in the range of $2.8 billion – $2.9 billion and GAAP net income of $363 million – $393 million. The company’s recent launch of NX Foundation Solutions is a move focused on optimizing solar project development for numerous soil conditions. Nextracker Inc. (NASDAQ:NXT)’s rapid integration of patented technologies from Ojjo and Solar Pile expands its product offerings, addressing utility-scale developers witnessing diverse ground conditions.
Cantor Fitzgerald reissued an “Overweight” rating on the shares of Nextracker Inc. (NASDAQ:NXT), setting a price target of $55.00 on 2nd August.
2) LiveRamp Holdings, Inc. (NYSE:RAMP)
Expected Upside Potential: 69.46%
Number of Hedge Fund Holders: 32
LiveRamp Holdings, Inc. (NYSE:RAMP) is a technology company, which operates a data collaboration platform in the US, Europe, the Asia-Pacific, and internationally.
Despite the challenges due to the macroeconomic environment and changes in Google’s privacy policies, LiveRamp Holdings, Inc. (NYSE:RAMP) is optimistic about its strategic position and solutions, like the Authenticated Traffic Solution (ATS) and RampID. The company focuses on promoting data collaboration, working with digital publishers in a bid to standardize terms of service and query templates.
LiveRamp Holdings, Inc. (NYSE:RAMP) has been maintaining a healthy relationship with Google Ads, collaborating on the Google PAIR initiative, and expects net positive revenue opportunities as a result of its partnership with Oracle. Wall Street analysts expect that market forces and economics should drive the adoption of alternative solutions to cookies. LiveRamp Holdings, Inc. (NYSE:RAMP) has been expanding beyond the retail and CPG space to commerce networks and other verticals.
The company has been navigating a shifting digital landscape with a strong emphasis on data collaboration and addressability. LiveRamp Holdings, Inc. (NYSE:RAMP)’s growth trajectory is expected to be aided by its Data Collaboration Platform, which should primarily benefit from the shift to cloud computing, the proliferation of AI tools in marketing, and growth in Commerce Media and CTV platforms.
For Q2 2025, LiveRamp Holdings, Inc. (NYSE:RAMP) expects revenue of $176 million and non-GAAP operating income of $31 million. Analysts at Benchmark restated a “Buy” rating, setting a $56.00 price objective on 6th August. As per Insider Monkey’s Q2 2024 database, LiveRamp Holdings, Inc. (NYSE:RAMP) was in the portfolios of 32 hedge funds.
1) PagSeguro Digital Ltd. (NYSE:PAGS)
Expected Upside Potential: 93.75%
Number of Hedge Fund Holders: 32
PagSeguro Digital Ltd. (NYSE:PAGS) is engaged in the provision of financial and digital payment solutions for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies in Brazil and internationally.
PagSeguro Digital Ltd. (NYSE:PAGS) plans to grow working capital and overdraft products in the coming quarters. The company has been aiming for a credit portfolio increase, with a strong emphasis on the LMEC segment and card-not-present transactions. It has a positive outlook on the roll-out of new products such as multiple cards and multi-acquiring for SMBs. Wall Street expects that investments in customer experience and product development should drive revenue acceleration. PagSeguro Digital Ltd. (NYSE:PAGS)’s payroll loan business remains focused on retirees and FGTS, with an average industry ticket size.
The company is open to market consolidation and acquisitions which complement its ecosystem. PagSeguro Digital Ltd. (NYSE:PAGS)’s focus on expanding the banking and payments platform led to significant gains in total revenue and net income. Its total revenue and income sat at R$4,557 million in Q2 2024, reflecting a rise of 19.1% on a YoY basis. This was led by increased revenues in the Payments segment. With the addition of more than 2 million clients and a significant growth in deposits, PagSeguro Digital Ltd. (NYSE:PAGS) continues to strengthen its position in the Brazilian financial technology sector.
Its strategic capital allocation, cost management, new product development, and customer experience enhancements are expected to act as principal tailwinds. The Goldman Sachs Group raised the shares of PagSeguro Digital Ltd. (NYSE:PAGS) from a “Neutral” rating to a “Buy” rating, issuing a $15.00 price objective on 26th June.
While we acknowledge the potential of PAGS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PAGS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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