The tech sector looks poised for growth, buoyed by expected interest rate cuts, decreasing inflation, and a surge in consumer spending. Additionally, the tech-heavy NASDAQ Composite's impressive 36.9% yield over the past year makes the sector particularly appealing to investors.

So, investors could consider robust tech stocksZoom Video Communications, Inc. (ZM), Daktronics, Inc. (DAKT), and Boxlight Corporation (BOXL), which boast significant smart money attention.

The tech industry undergoes continuous evolution, driven by emerging trends and advancements, positioning it as a sector characterized by swift growth. Tech services companies, committed to introducing innovations that enhance efficiency and foster growth, anticipate a rise in both private and government spending.

Moreover, firms prioritizing digital initiatives, harnessing advanced technologies to drive efficiency and cost reduction, as well as increasingly adopting cloud technologies and business intelligence are propelling growth in the IT market. The United States IT Services market is forecasted to experience a CAGR of 6.5% until 2028.

In addition, the global computer hardware market, expected to reach $909.80 billion by 2027, is witnessing significant growth propelled by technological advancements and the rising demand for computing devices across diverse industries.

On top of it, the adoption of cloud computing, the surge in the Internet of Things (IoT), and the necessity for high-performance computing, further accelerated by strides in Artificial Intelligence (AI) and Machine Learning (ML), are boosting the sector. As per a report by Precedence Research, the global AI in hardware market is expected to surpass around $248.09 billion by 2030, expanding at a CAGR of 24.5%.

Furthermore, emerging technologies such as 5G and IoT underscore the need for advanced networking architecture, boosting the networking industry. Besides, the networking industry benefits from heightened investments in network security solutions due to the escalating threat of cybersecurity. The global enterprise networking market is expected to grow at a CAGR of more than 6% from 2022 to 2027.

Considering the encouraging trends, let’s analyze the fundamental aspects of the three best tech stock picks.

Zoom Video Communications, Inc. (ZM)

ZM is a provider of video communication platforms. The company provides a unified communications and collaboration platform that delivers fundamental changes in how people interact, connecting them through frictionless and secure meetings, phone, chat, content sharing, and more.

ZM exhibits strong institutional ownership at 66.1%, signaling robust confidence from institutional investors, with total holdings valued at $11.66 billion. Notably, 307 institutions had recently increased their positions, and the stock is held by a total of 134 institutions, accumulating 170,257,115 institutional shares.

On December 6, 2023, ZM unveiled improvements to its AI-powered customer experience (CX) suite, along with the introduction of new pricing plans, which are anticipated to be accessible in the upcoming weeks.

During the fiscal third quarter, which ended October 31, 2023, ZM’s revenue grew 3.2% year-over-year to $1.14 billion. Its non-GAAP income from operations increased 154.7% over the prior-year quarter to $461.68 million. The company’s non-GAAP net income increased 24.2% year-over-year to $401.24 million. Its non-GAAP EPS came in at $0.45, representing an increase of 181.3% year-over-year.

Analysts expect ZM’s EPS to increase 13.2% year-over-year to $4.95 for the fiscal year ending January 2024. Its revenue is expected to grow 2.7% year-over-year to $4.51 billion for the same year. It surpassed the consensus EPS and revenue estimates in all four trailing quarters.

Over the past three months, the stock has gained 5.7% to close the last trading session at $68.50.

ZM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

ZM also has a B grade for Growth, Value, and Quality. It is ranked #15 out of 77 stocks in the Technology – Services industry.

Click here to see ZM’s additional Stability, Sentiment and Momentum ratings.

Daktronics, Inc. (DAKT)

DAKT designs, manufactures, and markets electronic display systems and related products for sporting, commercial, and transportation applications in the United States and internationally. It operates through Commercial; Live Events; High School Park and Recreation; Transportation; and International segments.

DAKT showcases substantial institutional ownership of 49.01%, with a total value of holdings amounting to $183 million. Noteworthy recent activity includes 73 holders increasing their positions and 21 holdings, resulting in a total of 22,633,566 institutional shares.

On December 15, 2023, DAKT announced that it was partnering with the Detroit Tigers to install the second-largest main video display in Major League Baseball at Comerica Park, replacing the current outfield display. The new display will feature over 15,000 square feet of digital canvas with 14.10 million pixels, measuring approximately 67 feet high by 185 feet wide. This project is expected to enhance the atmosphere at Comerica Park for Tigers' fans ahead of the 2024 baseball season.

During the fiscal second quarter, which ended October 28, 2023, its net sales and gross profit grew 6.4% and 71% year-over-year to $199.37 million and $54.20 million, respectively. The company generated adjusted net income of $12.82 million, compared to a loss of $12.98 million in the prior-year quarter.

DAKT’s EPS and revenue are expected to rise 158.6% and 8% year-over-year to $0.17 and $199.80 million in the current fiscal quarter ending January 2024, respectively.

Over the past year, the stock has gained 158.5% to close the last trading session at $8.09. It has returned 32.4% over the past six months.

DAKT’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

DAKT has an A grade for Value and a B for Growth and Quality. It ranks #13 among 35 stocks in the A-rated Technology – Hardware industry.

In addition to the POWR Ratings stated above, one can access DAKT’s Momentum, Sentiment, and Stability ratings here.

Boxlight Corporation (BOXL)

BOXL develops, sells, and services interactive classroom technology products and solutions for the K-12 education market worldwide. The company provides interactive and non-interactive projectors, flat panel displays, touch projectors, touchboards, and MimioTeach that could turn any interactive whiteboard, accessory document cameras, teacher pads for remote control, and assessment systems.

BOXL shows an institutional ownership of 7.73%, valued at $1 million. Recent institutional activity reveals that 11 holders increased their positions, and 7 maintained their positions, totaling 742,872 shares.

On January 4, 2024, BOXL launched MimioPro G, an interactive flat panel certified by Google EDLA, featuring seamless access to Google accounts and tools, including the Google Play Store and Google Workspace for Education.

With 50 touch points, micro antibacterial glass, and integrated NFC, MimioPro G simplifies workflows, making it a valuable upgrade for classrooms. BOXL is the sole education technology provider offering this unique combination, demonstrating its commitment to innovative solutions.

BOXL’s net revenues in the fiscal third quarter ended September 30, 2023, came in at $49.67 million. Its gross profit amounted to $18.01 million. The company’s adjusted EBITDA stood at $4.93 million.

As of September 30, its long-term debt came in at $43.36 million, compared to $43.78 million as of December 31, 2022.

Street expects BOXL’s revenue to rise 2.7% from the prior year to $2.72 in the fiscal year 2024. Its EPS for the same year is expected to rise 55.9% year-over-year. It surpassed the consensus EPS estimates in three of the trailing four quarters.

Over the past month, the stock has plummeted marginally to close the last trading session at $1.05.

BOXL’s POWR Ratings reflect solid prospects. It has an overall rating of B, equating to a Buy in our proprietary rating system.

It has a B grade for Value and Sentiment. Within the Technology – Communication/Networking industry, it is ranked #11 out of 52 stocks

To see BOXL’s additional Growth, Momentum, Stability, and Quality ratings, click here.

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ZM shares were trading at $70.57 per share on Friday morning, up $2.07 (+3.02%). Year-to-date, ZM has declined -1.86%, versus a 0.12% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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