In this article, we will look at the 8 Unstoppable Tech Stocks to Buy Now.
What’s Happening with Big Tech Stocks?
The technology sector has outperformed the market for the past several years. The industry has accounted for more than 30% of the overall market holdings especially led by Big Tech. One of the key factors that skyrocketed the stock prices for these mega-cap tech stocks is the hype around artificial intelligence.
However, we also witnessed the technology sector going into what analysts call an “AI Bubble”, where companies’ revenues are not justifying the large capital expenditure on artificial intelligence. We recently covered the 13 Best American Tech Stocks To Buy According to Short Sellers. We discussed how Big Tech has led the American stock market for several years. Here’s an extract from the article:
This dynamic progress was reflected in the US stock market when it rose more than 3% in the second quarter of 2024. In terms of the trade in artificial intelligence, technology companies remained at the top, and this trend did not appear to be slowing down throughout the quarter. The largest companies have outperformed the market this year, which has been a remarkable trend. The 500 largest companies’ large-cap market saw gains of 4.4% in Q2 YoY, increasing its 2024 return to above 15%. In contrast, the small-cap market saw a 3.3% drop, translating into a 1.6% 2024 return.
Even though technology companies outperformed in Q2 FY2024, Main Street Research’s James Demmert cautions investors not to treat all of them the same. Instead, they should prioritize those tech firms that can deliver consistent earnings, especially in an uncertain economy.
On the other hand, if we look at the recent figures the story tends to present a different picture. Almost a week ago, on August 30, CNBC reported that most of the Magnificent Seven were lower for the week, with investors’ favorite chipmaker taking the biggest hit after it fell short of largely inflated earnings expectations.
Dan Niles, Niles Investment Management founder and portfolio manager, joined CNBC on the same day suggesting investors to look outside of just the Magnificent 7 for the rest of the year. He mentioned that the companies have now declined on average 4% the day after reporting results, against rising 4% after releasing results in the first quarter.
He explained that this downward trend is a fundamental shift, pointing out that if we look at the financials of these stocks and forget the hype for a moment. We will see all these companies reporting their forward revenue estimates going down. Dan Niles acknowledged that it’s popular to talk about AI as these companies are leading the market but at some point, investors want some digestion of the capital expenditure, which has been going up consistently.
The portfolio manager also presented his bull case thesis for the 493 stocks in the S&P 500 stocks. He mentioned that if you look at the market on July 16, this was the time when the S&P 500 hit its all-time high. Since then it has been down around 1%, whereas the Magnificent Seven have been down around 8%.
He mentioned that if you are looking to invest, look for areas that benefit from the rate cuts. Niles mentioned areas like consumer staples, utility, telecom services, and other sectors of the market because he believes that the other 493 stocks will drive the market to new records. Lastly, Niles clarified that he still likes tech stocks but mentioned that it’s the other stocks that are going to benefit from the rate cuts during the rest of the year.
Now, let’s talk about the 8 unstoppable tech stocks to buy now.
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Our Methodology
To curate the list of 8 unstoppable tech stocks to buy now, we used the Finviz stock screener. We screened for technology companies that have gained at least 50% on a year-t0-date basis, as of September 10. We then selected the highest gainers that were the most popular among elite hedge funds. The stocks are ranked in ascending order of their year-to-date performance.
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 Unstoppable Tech Stocks to Buy Now
8. Marti Technologies, Inc. (NYSE:MRT)
Year-to-date Share Price Gain as of September 10: 198.48%
Number of Hedge Fund Holders: 1
Marti Technologies, Inc. (NYSE:MRT) is a leading mobility app in Türkiye, offering multiple transportation services to its riders. It is like Uber for Türkiye, in fact, more. Similar to Uber the company operates a Ride Hailing platform that connects riders with car and motorbike drivers. However, unlike Uber, it also offers a large fleet of e-mopeds, e-bikes, and e-scooters for rent.
Launched in 2021, the company has progressed to become the top urban transportation mobility app. Marti Technologies, Inc. (NYSE:MRT) has gained a 59% market share over a short period since its inception. Currently, the company has over 4.9 million unique riders, and more than 160,000 ride-hailing drivers.
On April 16, the company released its 2023 financial results, indicating it has outperformed its targets hitting over 498,000 unique riders and over 106,000 registered drivers during the year. As a result, its revenue improved 20% over the year to reach $24.9 million.
Marti Technologies, Inc. (NYSE:MRT) has also improved its operational income. Its average revenue per ride increased 43% year-over-year to reach $1.25 per ride. Moreover, the earnings of the company also increased significantly over the year to reach $6.65 million, indicating a 168% increase year-over-year.
It was held by 1 hedge fund in Q2 2024, with a position worth $1.02 million.
7. Red Cat Holdings, Inc. (NASDAQ:RCAT)
Year-to-date Share Price Gain as of September 10: 198.82%
Number of Hedge Fund Holders: 3
Red Cat Holdings, Inc. (NASDAQ:RCAT) is one of the 8 unstoppable tech stocks to buy now. The stock has gained 198.82% year-to-date and it was held by 3 hedge funds in Q2 2024, with total stakes worth $5.97 million. AIGH Investment Partners is the top shareholder of the company, with a position worth $5.65 million.
It operates in the technology industry providing drone technologies to military, government, and commercial customers. Through its subsidiaries, Red Cat Holdings, Inc. (NASDAQ:RCAT) engages in the integration of robotic hardware and software technologies to deliver actionable intelligence.
Its drone technology portfolio topped with its service industry, which is directly linked to the global rise in defense budget makes Red Cat Holdings, Inc. (NASDAQ:RCAT) a compelling investment opportunity. The portfolio of the company ranges from its Teal Drones, which are approved by the United States Department of Defense to Skypersonic technology that allows complete inspection even in GPS-denied environments.
The company is already reaping the benefit of increased defense spending in the US. During fiscal 2024, the company grew its revenue to $17.8 million indicating a 286% increase year-over-year. Due to strong organic growth and the acquisition of FlightWave Aerospace and Sentien Robotics, the latest quarter witnessed revenue doubling year-over-year to reach $6.4 million.
Management remains confident that Red Cat Holdings, Inc. (NASDAQ:RCAT) will continue its streak of record revenues as it expects to land more government contracts. Moreover, the recent acquisition of FlightWave Aerospace and Sentien Robotics is expected to add $10 to $20 million in revenue. The company has resumed its guidance for the next quarter and anticipates another record year moving to 2025.
6. Zeta Global Holdings Corp. (NYSE:ZETA)
Year-to-date Share Price Gain as of September 10: 206.07%
Number of Hedge Fund Holders: 27
Zeta Global Holdings Corp. (NYSE:ZETA) is a technology company that helps businesses with consumer intelligence and marketing automation through its cloud platform. The platform leverages artificial intelligence and trillions of consumer signals helping businesses grow, acquire, and retain customers.
The company is differentiated through its huge amount of data acquired from more than 450 scaled enterprise customers. Moreover, it is the largest single omnichannel marketing platform that combines identity, intelligence, and data.
Artificial intelligence has significantly boosted Zeta Global Holdings Corp’s. (NYSE:ZETA) progress, it has created more than 400 intelligent agents for its customers and increased conversion rates by more than 300% in June alone.
It has been growing its customer base significantly, during the latest quarter, Q2 2024, the number of scaled customers increased 10% year-over-year. What’s even more impressive is its Super Scaled customers growth rate, which grew 22% year-over-year. Super Scaled customers are those from which the company generates more than $1 million in revenue on a trailing twelve-month basis.
Strong growth across the board, with 6 out of 10 industry verticals of Zeta Global Holdings Corp. (NYSE:ZETA) posting 25% growth led to a robust increase in revenue and earnings. Revenue for the company grew 33% to $227.8 million and adjusted EBITDA grew 44% to $38.5 million year-over-year.
Management has increased its revenue guidance midpoint by $25 million indicating continued growth throughout the year. The stock was held by 27 hedge funds in Q2 2024, with total positions totaling $442.77 million. GPI Capital is the top shareholder of the company, with a position worth $180.68 million.
5. Neonode Inc. (NASDAQ:NEON)
Year-to-date Share Price Gain as of September 10: 206.93%
Number of Hedge Fund Holders: 1
Neonode Inc. (NASDAQ:NEON) is a technology company that develops electronic components for various industries. The company develops advanced optical sensing technologies that enhance human interaction with machines. Its technology offerings include touchless interactions, infrared touch technology, object detection, and machine perception.
Its technology serves the automotive industry, medical industry, industrial automation, and military and avionics industries. Recently, Neonode Inc. (NASDAQ:NEON) has positioned itself to capitalize on its licensing business model. On May 22, the company announced its first licensing agreement for its Touch Sensor Module Technology to YesAR, a Chinese firm specializing in holographic display technology. The shift in business model began in late 2023 and this recent agreement marks a significant step towards the transition.
The technologies manufactured and licensed by Neonode Inc. (NASDAQ:NEON) are in high demand due to the recent trend of autonomous vehicles. Its ongoing Driver Monitoring Systems project with the Original Equipment Manufacturer (“OEM”) of commercial vehicles was one of the key drivers of revenue for the latest quarter. The revenue for the quarter ended June 2024 was up 18.7% year-over-year and reached $1.4 million.
Management has been working towards reducing the operating expenses and was able to reduce the expense by 1.6% year-over-year to $2.7 million. Neonode Inc.’s (NASDAQ:NEON) decision to focus solely on the licensing business resulted in an increase in product sale revenue as a result of last-time buy orders from its existing customers to keep their supply lines intact.
NEON has soared around 206% on a year-to-date basis and was held by one hedge fund in Q2 2024, being Citadel Investment Group, with a position worth $74,019.
4. Dave Inc. (NASDAQ:DAVE)
Year-to-date Share Price Gain as of September 10: 287.24%
Number of Hedge Fund Holders: 13
Dave Inc. (NASDAQ:DAVE) is an American financial technology company that helps individuals manage their finances more efficiently. It addresses a market of around 180 million customers which has grown 8% since 2021. The company helps people manage cash flow, improve savings through budgeting tools, get extra cash through short-term funds, and much more at minimal overdraft costs.
Dave Inc. (NASDAQ:DAVE) has been doing great both in terms of accelerating revenue growth and reducing its operational expenses. The fiscal second quarter marked the third consecutive quarter of revenue growth and the fifth consecutive quarter of reducing operational expenses. Its revenue grew 31% year-over-year to reach $80 million, whereas the 28-day Delinquency Rate improved by 80 bps.
Moreover, the company significantly improved its profitability with adjusted EBITDA improving by $28 million year-over-year, and also grew its ExtraCash by 37% to $1.19 billion. As a result of exceptional performance during the first half of 2024, management has raised its guidance to $310 million and $325 million, with adjusted EBITDA between $40 million to $50 million.
DAVE was held by 13 hedge funds in Q2 2024, with total positions worth $50.95 million.
3. AudioEye, Inc. (NASDAQ:AEYE)
Year-to-date Share Price Gain as of September 10: 300.83%
Number of Hedge Fund Holders: 4
AudioEye, Inc. (NASDAQ:AEYE) is one of the unstoppable tech stocks to buy now. The stock has gained 300% on a year-to-date basis and was held by 4 hedge funds in Q2 2024, with total positions worth $2.80 million. Citadel Investment Group is the top shareholder of the company, with a position worth $1.84 million.
It is a technology company that specializes in making digital content accessible to everyone, including people with disabilities. Its main product includes a technology platform that allows businesses to convert their digital content in all formats.
AudioEye, Inc. (NASDAQ:AEYE) has reached a point where it can grow its revenue and annual recurring revenue (ARR) without additional expenses. The latest fiscal quarter resulted in a 19% increase year-over-year and was mainly supported by a 60% subsequent growth in the ARR.
A strong recurring revenue stream indicates long-term growth with low operational costs and high-profit margins. AudioEye, Inc. (NASDAQ:AEYE) also hit its record adjusted EBITDA of around $1.5 million, with EBITDA margins at 17%.
Management raised its full-year guidance to between $34.5 million and $34.8 million and expects the company to increase its free cash flow during the latter half of the year. It also has strategic measures in place to ensure market penetration at state, local, and government levels.
2. AST SpaceMobile, Inc. (NASDAQ:ASTS)
Year-to-date Share Price Gain as of September 10: 434.85%
Number of Hedge Fund Holders: 15
AST SpaceMobile, Inc. (NASDAQ:ASTS) is a technology company that is creating a unique network to provide internet service to smartphones directly from space. The company aims to build a constellation of 168 communication satellites costing around $3 billion. It has collaborations with major companies like AT&T, Verizon, and Alphabet to enhance their reach.
Recently, management announced the completion of the first five commercial satellites, which are set to launch in September. Moreover, around 17 more satellites are under production at AST SpaceMobile manufacturing facilities in Texas.
AST SpaceMobile, Inc. (NASDAQ:ASTS) requires more than $3 billion to fulfill its goal of 168 communication satellites. The company already has $285 million in cash reserves, however, until recently it received $71 million from a warrant redemption and expects another $84 million by the end of the redemption period. Management has indicated that the company is good to go for the year and this news has had a positive effect on investor sentiment.
Moreover, its strategic partnership with AT&T and Verizon is expected to add 850 MHz of premium spectrum with 100% geographical coverage and is expected to reach around 70% of US mobile users.
The stock has gained more than 434% on a year-to-date basis. ASTS was held by 15 hedge funds in Q2 2024, with total positions worth $67.38 million. Citadel Investment Group is the top shareholder of the company, with a position worth $17.9 million.
1. Inseego Corp. (NASDAQ:INSG)
Year-to-date Share Price Gain as of September 10: 579.48%
Number of Hedge Fund Holders: 3
Inseego Corp. (NASDAQ:INSG) is a leader in 5G mobile technology and fixed wireless solutions for mobile networks. The company designs products that help connect devices to 4G and 5G internet such as Mobile Hotspot and Routers. It also offers cloud management solutions that help companies manage their network devices remotely.
Inseego Corp. (NASDAQ:INSG) serves businesses, commercial customers, and governments through its technologies.
Management has remained focused on growing the business of the company through enhancing its product portfolio and delivering strong operating results. The company recently launched its new Inseego Ignite Channel Program and has already signed a new distributor and around 27 value-added resellers.
Moreover, its products are gaining traction in the public sphere, for instance, its MiFi® X PRO sales increased subsequently across all carriers. As a result, its revenue for Q2 2024 was above expectations and reached $59 million. Inseego Corp’s. (NASDAQ:INSG) earnings and profit margins also improved significantly during the quarter. Adjusted EBITDA for Q2 2024 was $8.4 million, with gross profit margins increasing from 35.7% to 39.0%, year-over-year.
Management is making strides to restructure its capital management and reduce debt. Moreover, the company has maintained its revenue projection range at $54 million to $58 million, indicating management’s confidence in a successful fiscal year.
INSG was held by 3 hedge funds in Q2 2024, with total stakes worth $1.43 million. D E Shaw is the top shareholder of the company, with a position worth $2.38 million.
While we acknowledge the potential of Inseego Corp. (NASDAQ:INSG) 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 a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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