The tech market is expanding rapidly, largely fueled by the increasing demand for digital solutions and technologies across various industries. Thus, investors could consider adding fundamentally sound tech stocks, Zoom Communications Inc. (ZM), Pinterest, Inc. (PINS), and Photronics, Inc. (PLAB), which are poised for a major comeback.
The tech sector is expected to see continued growth in 2025, driven by advancements in AI, automation, and cloud computing. The rising demand for cybersecurity and data-centric innovations will further fuel this growth. Moreover, the rollout of 5G and the rise of IoT will create new opportunities in connectivity and digital transformation.
On top of it, the rise in adoption of public and hybrid cloud-based solutions in organizations increases system reliability and advances new realities created by the pandemic. Additionally, IMARC Group expects the global software as a service market to grow at a CAGR of 14.8% by 2033.
Considering these factors, let’s take a look at the fundamentals of the three tech stock picks.
Zoom Communications Inc. (ZM)
ZM provides a unified communications platform. The company offers Zoom Meetings that offers HD video, voice, chat, and content sharing through mobile devices, desktops, laptops, telephones, and conference room systems; Zoom Phone, an enterprise cloud phone system; and Zoom Chat enables users to share messages, images, audio files, and content.
On January 16, 2025, ZM announced the launch of its redesigned Team Chat sidebar, offering users a more customizable and efficient workspace. The new sidebar allows users to organize chats, channels, and apps according to their needs, with features such as drag-and-drop tab arrangement, advanced sorting, and filtering.
ZM's forward EV/EBIT of 10.45x is 52.8% lower than the industry average of 22.14x. Its forward EV/EBITDA multiple of 9.80 is 39.5% lower than the industry average of 16.18.
ZM’s revenue for the third quarter (ended October 31, 2024) increased 3.5% year-over-year to $1.18 billion. ZM’s non-GAAP net income came in at $435.07 million, and its non-GAAP net income per share stood at $0.66, up 8.4% and 42.6% year-over-year, respectively.
Analysts expect ZM’s revenue for the fourth quarter (ending January 2025) to grow 3.8% year-over-year to $1.19 billion, and its EPS is expected to be $1.35.
Shares of ZM have gained 4.1% over the past month to close the last trading session at $87.29.
ZM’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates 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 has a B grade for Value, Sentiment, and Quality. It is ranked #12 out of 78 stocks in the Technology - Services industry.
In addition to the POWR Ratings we’ve stated above, we also have ZM ratings for Momentum, Stability, and Growth. Get all ZM ratings here.
Pinterest, Inc. (PINS)
PINS operates as a visual search and discovery platform in the United States and internationally. Its platform allows people to find ideas, such as recipes, home and style inspiration, and others, and to search, save, and shop for ideas.
PINS’ forward non-GAAP PEG of 0.47x is 68.4% lower than the industry average of 1.47x.
For the third quarter that ended September 30, 2024, PINS’ revenue rose 18% year-over-year to $898.37 million, and its non-GAAP net income grew 42% from the year-ago value to $275.02 million. Its non-GAAP net income per share increased 42.9% year-over-year to $0.40. The company’s adjusted EBITDA came in at $242.13 million, reflecting growth of 31% from the prior year’s quarter.
Street expects PINS’ revenue for the fourth quarter (ended December 2024) to grow 16.1% year-over-year to $1.14 billion, and its EPS is expected to grow 22.2% year-over-year to $0.65 for the same quarter. Moreover, the company has topped the consensus EPS estimates in each of the trailing four quarters.
Over the past month, PINS’ stock has surged 13% to close the last trading session at $32.93.
PINS’ robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade Quality. PINS is ranked #20 out of 48 stocks in the A-rated Internet industry.
Click here to access the additional PINS ratings (Value, Momentum, Growth, and Stability).
Photronics, Inc. (PLAB)
PLAB manufactures and sells photomask products and services in the United States, Taiwan, China, Korea, Europe, and internationally.
PLAB’s forward EV/Sales of 1.31x is 61.1% lower than the industry average of 3.38x. Its forward EV/EBITDA multiple of 3.78 is 76.6% lower than the industry average of 16.17.
During the fiscal 2024 first quarter that ended on October 31, 2024, PLAB’s revenue increased 5.5% year-over-year to $22.63 million. Its gross profit rose 9.5% from the year-ago value to $82.30 million. Also, PLAB’s total assets stood at $1.71 billion as of October 31, 2024, compared to $1.53 billion as of October 31, 2023.
Street expects PLAB’s revenue and EPS for the second quarter ending April 2025 to increase 3.7% and 13% year-over-year to $210 million and $0.52, respectively.
PLAB’s stock gained 1.1% intraday to close the last trading session at $23.06.
PLAB’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Value, Sentiment, and Quality. PLAB is ranked #5 out of 90 stocks in the Semiconductor & Wireless Chip industry.
In addition to the POWR Ratings highlighted above, one can access PLAB’s ratings (Growth, Momentum, and Stability) here.
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ZM shares were trading at $86.26 per share on Monday afternoon, down $0.68 (-0.78%). Year-to-date, ZM has gained 5.70%, versus a 2.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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