The tech industry has posted market-beating results in 2024, posting year-to-date returns of 28.33%, beating the S&P 500, which gained 17.73% in the same period. If you have not invested in any tech stock, this is a great time to do so, as tech stocks continue to rise in price.
Companies in the tech sector are set to begin releasing their Q2 returns this month, which could boost their share price. Overall, the performance of technology stocks has been rewarding for investors, and these three tech stocks show the most promise for future growth.
Some of these stocks are stocks you may not have heard of, making the potential hidden gems to invest in, while others are very well-known players in the technology space. But all the companies listed here have solid fundamentals and are ready to skyrocket in value in the coming months.
Let us look into these stocks’ performance and what analysts think about their future performance.
Endava (DAVA)
Endava (NYSE:DAVA) is a British IT firm that offers its clients digital consultancy services. Most of its revenue comes from the financial sector, which is responsible for over half of its revenue.
The company uses a well-known strategy in the consultancy world, where it acquires clients and grows its offerings to them, increasing its revenue. The company focuses on the financial sector, media, and telecom services.
However, it is expanding its offerings into new verticals and regions. For instance, in June, it announced an expansion in its partnership with Google Cloud as part of its strategy in the Asia-Pacific region.
In its third quarter fiscal 2024 results, Endava reported a year-over-year revenue decline of 14.3% to £174.4 million. It also reported a drop in adjusted EPS to £0.22 compared to £0.59 the previous year. Endava’s CEO, John Cotterell, attributed the decline to a challenging demand environment.
However, he noted that they had seen a slight increase in discretionary spending. Discretionary spending has seen a slump amidst an elevated interest rate environment, especially in the U.S. However, this is a temporary headwind; when rates come down, Endava could see an uptick in demand.
With the price of this tech stock down 58% YTD to $32, this is a great time to hold it in anticipation of potential future growth. Analysts forecast an average price target of $41.83 for the stock, a 42.57% upside. On the high end of the forecast, analysts predict a price of $66, a 124.95% upside.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) is a leading semiconductor manufacturer at the heart of the tech revolution. The company offers chip design and manufacturing services that are in high demand globally.
In April, TSMC announced it had received a $6.6 billion grant from the U.S. government to build a manufacturing facility in Arizona.
Besides the U.S., the company has received billions in grants from Japan and China to expand operations there. According to its annual report for the year ended December 31, 2023, it received $1.51 billion and $224.1 million in grants from Japan and China, respectively.
These grants will undoubtedly play an important role in the company’s ability to meet rising demand amid a boom in AI applications. In its Q1 fiscal 2024 results released in April, TSMC reported revenue of $18.22 billion, a year-over-year increase of 16.5%, and a net income of $6.93 billion, a year-over-year rise of 8.9%.
In the upcoming second-quarter results, expected on July 18, TSMC has forecast revenue of $19.6 billion to $20.4 billion, above analysts’ estimate of $20.22 billion.
Looking at the tech stock’s price forecast, analysts give it a buy rating. They give TSM stock an average price target of $185.14, a 0.35% upside. Meanwhile, the most optimistic analysts forecast a price of $218.00, an 18.16% upside.
Its top-line performance and numerous government grants make this tech stock a must-have in any portfolio.
NICE (NICE)
Nice (NASDAQ:NICE) is a tech company that offers on-premise and cloud-based software solutions focusing on customer engagement solutions. Additionally, its products are in high demand in the financial crime and compliance industry.
It derives a majority of its revenue from its U.S. operation. However, it is currently working on international expansion. It has offices in South America, the U.S., SE Asia, Europe, and the Middle East.
In its Q1 fiscal 2024 results, Nice reported 15% year-over-year revenue growth to $659.3 million. It also revealed that cloud revenue had grown 27% year-over-year to $468.4 million. Additionally, it reported a 30% increase in operating income to $121.4 million, while operating cash flow rose from 30% year-over-year to a record $254 million.
For the second quarter, Nice expects non-GAAP revenue of $657 million to $667 million, representing 14% year-over-year growth at the midpoint. Non-GAAP EPS is forecast to come in at $2.53 to $2.63, a 21% year-over-year increase at the midpoint.
For the full year, Nice forecast revenue of $2,715 million to $2,735 million, a 15% year-over-year rise, and non-GAAP EPS of $10.53 to $10.73, a 21% increase at the midpoint.
Analysts are upbeat about the future of this tech stock, giving it an overall buy rating. They forecast an average price target of $272.07, a 59.56% upside. The most optimistic analysts forecast a price of $346.00, a 102.92% upside.
Based on the optimistic forecast and Nice’s double-digit growth in revenue and earnings, you should consider adding this tech stock to your portfolio. You could potentially experience supercharged growth in profitability by buying Nice this month.
On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.