We recently published a list of 10 Hot Software Stocks with High Upside Potential. In this article, we are going to take a look at where NextNav Inc. (NASDAQ:NN) stands against other hot software stocks with high upside potential.
As per MarkNtel Advisors, which is a leading consulting, data analytics, and market research firm, the US software market is expected to grow at a CAGR of ~7.17% over 2024 – 2030. Possessing a strong legacy of innovation and entrepreneurship, the US has been categorized as a world leader in software development, housing a thriving environment of startups, software corporations, and academic institutions. With businesses using technology to fuel creativity, productivity, and competitiveness, the broader US software market continues to move towards digital transformation throughout all industries.
In a bid to be more flexible, responsive to market demands, and scalable, it’s important to modernize legacy systems, procedures, and infrastructure apart from implementing cutting-edge technologies, says MarkNtel Advisors.
Emerging Trends in Software Industry in 2025
With software development evolving at a significant pace (thanks to technological innovation and dynamic business demands), businesses are required to stay ahead in a bid to remain competitive and deliver ground-breaking software solutions, says Datafortune. The rise of AI-powered development and low-code/no-code platforms, integration of DevSecOps practices, and sustainable software engineering are some of the key trends likely to shape software development in 2025.
AI-powered coding assistants, automation of tools, and intelligent debugging tools continue to transform the working infrastructure of developers. Datafortune believes that businesses are increasingly leveraging AI to automate workflows, accelerate software development, and enhance code quality.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Low-Code/No-Code Platforms and Sustainable Software Engineering
As per Datafortune, the demand for rapid application development continues to drive the adoption of low-code and no-code platforms. Such platforms allow business users and developers to develop applications with minimal or no coding, which makes software development more accessible. The firm believes that, by 2025, most of the enterprise applications are expected to be created using these platforms, which will reduce the requirement for traditional software development cycles and allow firms to innovate rapidly.
Sustainability continues to become a trend in software development. With companies actively optimizing their apps, green coding, optimal algorithms, and cloud optimization are being adopted as best practices, says Datafortune. Notably, the companies are also prioritizing sustainability in their software development services through the removal of redundant code and minimizing energy consumption in the data centers.
Overall, the broader software industry in 2025 will be characterized by innovations in AI, sustainability, security, and advanced and ground-breaking technologies like quantum computing.
Our Methodology
To list the 10 Hot Software Stocks with High Upside Potential, we used a screener to find software stocks. We chose the stocks which have increased significantly over the past 6 months, and that analysts still see upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 14. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
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).
An aerial view of a bustling metropolis with internet towers in the distance.
NextNav Inc. (NASDAQ:NN)
% Gain Over Past 6 Months: ~78.6%
Average Upside Potential: ~57.2%
Number of Hedge Fund Holders: 17
NextNav Inc. (NASDAQ:NN) is engaged in providing next-generation positioning, navigation, and timing solutions in the US. In Q3 2024, the company remains focused on advancing its strategic vision and addressing the critical need for a terrestrial complement and backup to GPS. Furthermore, it continues to work with relevant government agencies to deliver a solution that will provide significant public benefit. During the 3 and 9 months ended September 30, 2024, NextNav Inc. (NASDAQ:NN)’s revenue was mainly aided by higher service revenue from technology and services contracts with government and commercial customers.
A recent Brattle Group report highlighted that the adoption of NextNav Inc. (NASDAQ:NN)’s proposal to reconfigure the Lower 900 MHz provides the broader US economy the equivalent of a $10.8 billion insurance policy to protect against GPS outages without taxpayer funding, plus additional benefits of $3.8 billion from increased resiliency. Collectively, this brings the total quantified value of having a backup to GPS to $14.6 billion.
Laughing Water Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“NextNav Inc. (NASDAQ:NN) – Nextnav, our next-gen GPS / wireless spectrum investment, was our largest contributor to 2024 returns, and remains our largest position. At this time we are in a holding pattern with Nextnav as we wait for updates from the Federal Communications Commission (FCC) on the Company’s petition to update the rules that govern the 900 MHz spectrum band in a way that will allow for the creation of a terrestrial GPS system in the U.S., as well as ~15 MHz of 5G spectrum.
There is some uncertainty surrounding this process, but commentary from incoming FCC Chair Brendan Carr and other Commissioners suggests the chances for approval are favorable as terrestrial GPS is a National Security priority, and refilling the spectrum pipeline is an FCC priority.
The stock has been under heavy pressure in recent weeks as two different private equity funds – one a 2005 vintage, and the other a 2012 vintage – appear to have reached the end of their fund lives and are thus aggressively selling shares. I suspect this overhang will clear with time…” (Click here to read the full text)
Overall, NN ranks 4th on our list of hot software stocks with high upside potential. While we acknowledge the potential of NN 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 NN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
