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The stock market has reached record highs due to the IT sector. Top holdings in the S&P 500 include many IT businesses. The Magnificent Seven holds most of its equities in IT companies and also has an ETF that tracks the Nasdaq Composite and the S&P 500. The Roundhill Magnificent Seven ETF (NASDAQ:MAGS), an investment vehicle, demonstrates the potential of technology.
But, you can beat the stock market without buying big tech companies. Indeed, there are investors who argue that focusing on smaller businesses can lead to greater profits. Granted, these are still big companies—their market capitalization is close to $100 billion.
During boom economic cycles, technology frequently stagnates. Many IT companies are able to grow in ways that other industries find challenging. In light of this, these tech stocks appear to be well-positioned for significant gains in the upcoming bull market.
3 Tech Stocks for the Coming Bull Run
Crowdstrike (CRWD)
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Corporations and small businesses need to keep themselves safe from cyberattacks. A breach can cost millions of dollars between stolen data, lost business, legal fees and other costs.
Rather than deal with all of those expenses, companies are turning to cybersecurity firms like Crowdstrike (NASDAQ:CRWD) to protect their data.
With the CrowdStrike Falcon platform, businesses can identify risks and take action before they become critical. In addition, CrowdStrike provides several strategies to strengthen cybersecurity, and the corporation uses artificial intelligence (AI) as an additional layer of defense against hackers.
There have been significant challenges facing the cybersecurity field recently, but none of them have stopped CrowdStrike from expanding. In Q1 FY25, revenue grew by 33% year-on-year and net income reached $42.8 million.
It’s important to remember that other cybersecurity companies are downsizing significantly to resume expansion. Crowdstrike is leveraging this to increase its market share and growth rates may accelerate if the challenges ease.
Upwork (UPWK)
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Upwork (NASDAQ:UPWK) has been a storied stock since the pandemic. In roughly one year, Upwork went from trading at $5 a share to exceeding $60 at its all-time high.
Remote work has become more popular, and many people use Upwork to find job opportunities. However, the stock got a bit ahead of itself during that rally and is down by more than 80% from its peak.
Since many investors started losing interest in Upwork, a few things have happened. The business is now profitable; In Q1 2024, it generated $18.4 million in net income. It has increased by 7.4% compared to last year. In that quarter, revenue rose 19% from the prior year to $190.9 million.
The stock has lost 27% since the start of the year and currently has a P/E ratio of 31. Upwork is still in high demand. The number of active customers grew by 5% year-on-year to over 872,000. Upwork should continue to expand as freelance work and remote employment become more popular.
Upwork also has some attractive earning options. With over 100,000 active users, her Freelancer Plus subscription service has grown revenue by 76% year over year.
Advertising revenue is the company’s fastest-growing revenue stream, growing 93% year-over-year. High profit margins are another feature of promotions, which can lower a stock’s P/E ratio.
The business has guided its Q2 sales between $190 million and $195 million. At the halfway mark, it represents a 14.2% increase over the previous year.
Duolingo (DUOL)
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Millions of people learn a new language every year. Some take it as entertainment, while others use tools and apps to study languages to become more culturally aware.
Popular education program Duolingo (NASDAQ:DUOL) makes learning new languages easy and affordable for users.
The program guides users through spoken and text tasks to provide fundamental knowledge. Lessons become more complex as you progress through the program. Duolingo currently has 31.4 million daily active users and 97.6 million monthly active users. There is a lot of activity on the app and this activity has led to remarkable economic growth.
In Q1 2024, revenue grew 45% year over year to $167.6 million. Net income for the quarter was $27.0 million, in contrast to a net loss of $2.6 million in the same period last year. Sales growth is strong and profit margins are increasing.
Although the stock has only gained 42% over the past five years, things should improve soon.
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