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Amidst the buzz surrounding the Magnificent Seven stocks, a more discreet set of tech gems beckons investors. While the seven mega-cap tech behemoths garner headlines for their dominance, smaller tech stocks linger in the shadows, offering ample potential for substantial gains. These unsung heroes have quietly outperformed, serving as stalwart pillars for robust portfolio returns. Here are three tech stocks deserving a place beyond the mega-cap heavyweights.
Adobe (ADBE)
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Beneath Adobe’s recent lackluster guidance lies an enticing opportunity for investors. The dip in ADBE stock following disappointing forecasts presents a chance to capitalize on this software company. Despite a 10% decline year-to-date, analysts advocate viewing this as a chance to delve into this tech gem. Morningstar’s endorsement of a $610 per share price target indicates a potential 18% surge from current levels.
The software company behind popular tools like Photoshop and Illustrator exceeded Q4 2023 expectations with an EPS of $4.48, beating analyst estimates of $4.38. Revenue stood at $5.18 billion versus the projected $5.14 billion. Concerns emerge with the advent of “Sora,” a rival AI platform from OpenAI capable of video creation from text prompts. Nevertheless, analysts view these apprehensions as excessive.
CrowdStrike (CRWD)
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The meteoric rise of cybersecurity firm CrowdStrike has captured attention, with CRWD stock surging 21% post the Q4 2023 financial report that surpassed expectations. Over the past year, CrowdStrike’s stock ascended by 141%, solidifying its position as a top-performing tech entity. Distinguished from its cybersecurity counterparts, the company dazzled with an EPS of 95 cents, outperforming the anticipated 82 cents. Annual revenue for 2023 soared by 36% to $3 billion, with a Q1 revenue projection of $902 million to $906 million. Emphasizing its bold ambition, CrowdStrike eyes an annual recurring revenue milestone of $10 billion by 2030.
Block (SQ)
The Rise of Block (SQ): Profiting from the Crypto Surge
A New Chapter: From Square to Block
Following a strategic rebranding move, the once-ubiquitous financial services company known as Square has metamorphosed into Block (NYSE: SQ), signaling a bold new era in the company’s trajectory. As the digital payments sector continues to evolve rapidly, Block has positioned itself as a major player in the crypto space, particularly with the surging popularity of Bitcoin (BTC-USD) in recent times.
Cashing in on Cryptocurrency
Block’s astute investment decisions have placed it among the elite ranks of corporate entities with a substantial Bitcoin portfolio. The company’s current stash of 8,038 Bitcoins, valued at a staggering $520 million, underscores its bullish outlook on digital assets and its shrewd financial acumen. This strategic move has paid off handsomely for Block, as evidenced by its recent Q4 2023 earnings report that dazzled investors and analysts alike.
Surprising Profit Amidst Turbulent Waters
In a classic tale of financial resilience, Block managed to defy market expectations with an unexpected profit of 45 cents per share, a stark contrast to the anticipated 57 cent loss forecasted by Wall Street. The standout performer in these earnings was undeniably Block’s Bitcoin holdings, which soared to a $207 million gain during the quarter, casting a rosy glow over the company’s balance sheet.
The Cash App Bonanza
Adding to its already impressive performance, Block’s Cash App emerged as a powerhouse in the realm of cryptocurrency transactions, raking in $66 million in profits from Bitcoin sales. This remarkable 90% surge in profitability from the previous year exemplifies Block’s strategic foresight and adaptability in harnessing the potential of emerging fintech trends.
A Promising Trajectory
Throughout its transformative journey from its Square roots to its current Block identity, the company has navigated choppy waters with finesse and poise. Benefitting from the crypto wave that has swept across global markets, SQ stock has soared by 10% year-to-date, further solidifying its position as a standout performer in the financial services sector. With its finger firmly on the pulse of the digital economy, Block seems poised to ride the cryptocurrency surge to even greater heights in the foreseeable future.
By Joel Baglole
