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Buy 5 Technology Services Stocks to Enhance Your Portfolio
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The U.S. business services space has been benefiting from the strong fundamentals of the economy. Despite facing a record-high interest rate and extremely tight monetary control by the Fed, this sector has provided double-digit returns in the past year.
Within this sector, the technology services industry is mature, with demand for services in good shape. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends. Consequently, this industry is flourishing in 2024.
Year to date, the Business Services sector and the Technology services industry have advanced 6.9% and 17.9% respectively. Since the Technology Services industry ranks within the top 35% of Zacks Ranked Industries, we expect it to outperform the market over the next three to six months.
The business software industry is gaining from robust demand for multi-cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating artificial intelligence and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving the decision-making process, is a key catalyst.
Per market.us, the worldwide artificial intelligence market was worth $177 billion in 2023 and is anticipated to reach a staggering $2.75 trillion by 2032. PricewaterhouseCoopers International Ltd. estimated that AI could contribute up to $15.7 trillion to the global economy in 2030. Of this, $6.6 trillion is likely to come from increased productivity and $9.1 trillion should come from consumption-side effects.
Our Top Picks
We have narrowed our search to five technology services stocks that have a solid upside left for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Spotify Technology S.A. (SPOT - Free Report) provides audio streaming services worldwide. SPOT operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. SPOT also offers sales, distribution and marketing, contract research and development, and customer support services.
Spotify Technology has an expected revenue and earnings growth rate of 19.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.2% over the last seven days.
Block Inc. (SQ - Free Report) is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of the Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications that run on programmable blockchains. SQ is also one of the largest Bitcoin investors.
Block has an expected revenue and earnings growth rate of 13.9% and 72.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days.
SPX Technologies Inc. (SPXC - Free Report) supplies infrastructure equipment serving the heating, ventilation, and cooling (HVAC) and detection and measurement markets worldwide. SPXC operates in two segments, HVAC and Detection and Measurement.
The HVAC segment engineers, designs, manufactures, installs, and services package and process cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as boilers, heating, and ventilation products for the residential and commercial markets. The Detection and Measurement segment offers underground pipe and cable locators, inspection and rehabilitation equipment, and robotic systems.
SPX Technologies has an expected revenue and earnings growth rate of 14.7% and 24.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through the Duolingo app. DUOL also provides a digital language proficiency assessment exam.
Duolingo has an expected revenue and earnings growth rate of 37.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 26.1% over the last 60 days.
Zeta Global Holdings Corp. (ZETA - Free Report) is a data-driven, cloud-based marketing technology company that empowers enterprises to acquire, grow and retain customers. Zeta Marketing Platform analyzes billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated machine learning algorithms and the industry's opted-in data set for omnichannel marketing, and Consumer Data platform ingests, analyzes, and distills disparate data points to generate a single view of a consumer, encompassing identity, profile characteristics, behaviors, and purchase intent.
ZETA also offers various types of product suites, such as agile intelligence suite, which synthesizes data and data generated by its customers to uncover consumer insights that are translated into marketing programs, and CDP, which helps in consolidating multiple databases and internal and external data feeds and organize data based on needs and performance metrics.
Zeta Global Holdings has an expected revenue and earnings growth rate of 23.4% and 51.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.
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Buy 5 Technology Services Stocks to Enhance Your Portfolio
The U.S. business services space has been benefiting from the strong fundamentals of the economy. Despite facing a record-high interest rate and extremely tight monetary control by the Fed, this sector has provided double-digit returns in the past year.
Within this sector, the technology services industry is mature, with demand for services in good shape. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends. Consequently, this industry is flourishing in 2024.
In the past year, the Zacks Defined Business Services sector has provided a double-digit return of 12.6% and the Technology Services industry has rallied an impressive 37.8%.
Year to date, the Business Services sector and the Technology services industry have advanced 6.9% and 17.9% respectively. Since the Technology Services industry ranks within the top 35% of Zacks Ranked Industries, we expect it to outperform the market over the next three to six months.
The business software industry is gaining from robust demand for multi-cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating artificial intelligence and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving the decision-making process, is a key catalyst.
Per market.us, the worldwide artificial intelligence market was worth $177 billion in 2023 and is anticipated to reach a staggering $2.75 trillion by 2032. PricewaterhouseCoopers International Ltd. estimated that AI could contribute up to $15.7 trillion to the global economy in 2030. Of this, $6.6 trillion is likely to come from increased productivity and $9.1 trillion should come from consumption-side effects.
Our Top Picks
We have narrowed our search to five technology services stocks that have a solid upside left for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Spotify Technology S.A. (SPOT - Free Report) provides audio streaming services worldwide. SPOT operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. SPOT also offers sales, distribution and marketing, contract research and development, and customer support services.
Spotify Technology has an expected revenue and earnings growth rate of 19.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.2% over the last seven days.
Block Inc. (SQ - Free Report) is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of the Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications that run on programmable blockchains. SQ is also one of the largest Bitcoin investors.
Block has an expected revenue and earnings growth rate of 13.9% and 72.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days.
SPX Technologies Inc. (SPXC - Free Report) supplies infrastructure equipment serving the heating, ventilation, and cooling (HVAC) and detection and measurement markets worldwide. SPXC operates in two segments, HVAC and Detection and Measurement.
The HVAC segment engineers, designs, manufactures, installs, and services package and process cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as boilers, heating, and ventilation products for the residential and commercial markets. The Detection and Measurement segment offers underground pipe and cable locators, inspection and rehabilitation equipment, and robotic systems.
SPX Technologies has an expected revenue and earnings growth rate of 14.7% and 24.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
Duolingo Inc. (DUOL - Free Report) operates as a mobile learning platform in the United States, China, the United Kingdom, and internationally. DUOL offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through the Duolingo app. DUOL also provides a digital language proficiency assessment exam.
Duolingo has an expected revenue and earnings growth rate of 37.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 26.1% over the last 60 days.
Zeta Global Holdings Corp. (ZETA - Free Report) is a data-driven, cloud-based marketing technology company that empowers enterprises to acquire, grow and retain customers. Zeta Marketing Platform analyzes billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated machine learning algorithms and the industry's opted-in data set for omnichannel marketing, and Consumer Data platform ingests, analyzes, and distills disparate data points to generate a single view of a consumer, encompassing identity, profile characteristics, behaviors, and purchase intent.
ZETA also offers various types of product suites, such as agile intelligence suite, which synthesizes data and data generated by its customers to uncover consumer insights that are translated into marketing programs, and CDP, which helps in consolidating multiple databases and internal and external data feeds and organize data based on needs and performance metrics.
Zeta Global Holdings has an expected revenue and earnings growth rate of 23.4% and 51.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.