We recently published a list of 15 Hot Tech Stocks to Buy Right Now. In this article, we are going to take a look at where Clearwater Analytics Holdings Inc. (NYSE:CWAN) stands against other hot tech stocks to buy right now.
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.
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).
A wide shot of a large financial data center.
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.”
Overall, CWAN ranks 12th on our list of hot tech stocks to buy right now. While we acknowledge the potential of CWAN 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 CWAN 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
Disclosure: None. This article is originally published at Insider Monkey.
