The tech industry is teeming with opportunity, and 2025 is shaping up to be a transformative year for the sector. For investors looking to ride the wave of innovation, I have highlighted three hidden gems with the potential for exponential growth: Viavi Solutions Inc. (VIAV), A10 Networks, Inc. (ATEN), and Digi International Inc. (DGII).
The tech industry is driven by soaring demand for IT infrastructure, cutting-edge devices, advanced software, and transformative services. According to Gartner, Inc. (IT), global tech spending is expected to reach $5.61 trillion this year, an increase of 9.8% year over year. Segments like data center systems, devices, and software are expected to see double-digit expansion, fueled by the need for generative AI hardware upgrades.
While the immediate impact of technologies like generative AI is beginning to unfold, experts predict that the true wave of AI-driven growth will crest in 2026. With businesses racing to integrate AI into operations, this evolving landscape offers fertile ground for tech investments.
In the telecommunications space, the integration of technologies like 5G, IoT, and NB-IoT is reshaping connectivity, expanding reach into remote areas, and redefining how we communicate. By 2029, the telecom market is projected to grow to $3.94 trillion, at a healthy CAGR of 5.6%, thanks to trends like the deployment of 5G for advanced connectivity, the rise of digital twin-as-a-service (DTaaS) to create virtual telecom infrastructure and AI and machine learning for enhanced customer experiences.
Meanwhile, the global data center networking market is set to grow from $39.52 billion in 2025 to $93.43 billion by 2032 (CAGR of 13.1%), fueled by the rising need for scalable, cost-effective solutions.
Considering these conducive trends, let’s examine the Technology- Communication/Networking stocks in detail, beginning with the third preference.
Stock #3: Viavi Solutions Inc. (VIAV)
VIAV provides network test, monitoring, and assurance solutions for communications service providers, hyperscalers, network equipment manufacturers, original equipment manufacturers, and government and avionics customers in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa.
On December 13, 2024, VIAV announced its agreement to acquire Inertial Labs, Inc. for an initial $150 million, with up to $175 million contingent over four years. The transaction will be financed using VIAV’s cash reserves. This strategic acquisition aligns with VIAV’s goals to improve its portfolio with alternate navigation solutions, strengthen its footprint in aerospace and defense markets, and expedite entry into autonomous systems across air, land, and sea for military and industrial applications.
In the same month, VIAV and Rohde & Schwarz announced that SKY Perfect JSAT Corporation, a leader in satellite communications and pay TV broadcasting in Japan, has selected their joint Non-Terrestrial Network (NTN) for deployment. The collaboration leverages VIAV’s precision solutions, including drone-based LiDAR and camera systems, to expand its reach in emerging markets.
During the fiscal 2025 first quarter that ended September 28, 2024, VIAV’s net revenue and gross profit amounted to $238.20 million and $136.10 million, respectively. Its operating expenses decreased 2.9% year-over-year to $124.60 million. In addition, non-GAAP net income and non-GAAP EPS for the quarter came in at $12.40 million and $0.06, respectively.
Analysts expect VIAV’s EPS and revenue for the fiscal third quarter ending March 2025 to increase 48.9% and 3.9% year-over-year to $0.09 and $255.60 million, respectively. Moreover, it surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
Over the past six months, the stock has gained 28.6%, closing the last trading session at $9.71.
VIAV’s POWR Ratings reflect its robust 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 distinct factors, with each factor weighted to an optimal degree.
VIAV has a B grade in Momentum and Quality. It is ranked #12 out of 46 stocks in the B-rated Technology - Communication/Networking industry.
Beyond what we have stated above, we have also given VIAV grades for Growth, Value, Stability, and Sentiment. You can get all the VIAV ratings here.
Stock #2: A10 Networks, Inc. (ATEN)
ATEN provides advanced networking and security solutions through products like Thunder Application Delivery Controller, SSL Insight, and Convergent Firewall. It serves cloud providers, telecoms, governments, and enterprises in industries such as finance, retail, and technology. Its offerings include DDoS mitigation tools and intelligent management platforms, which are available as hardware, software, and cloud-native solutions.
On December 02, 2024, buoyed by its strong financial performance, the company paid its shareholders a quarterly dividend of $0.06 per share. ATEN pays an annual dividend of $0.24, which translates to a dividend yield of 1.25% at the prevailing price levels. Its four-year average dividend yield is 1.11%. Moreover, its dividend payouts have increased at a CAGR of 68.7% over the past three years.
In the fiscal third quarter ended September 30, 2024, ATEN’s total net revenue increased 15.5% year-over-year to $66.72 million. Its income from operations improved from $2.21 million recorded last year to $10.44 million. Moreover, its non-GAAP net income stood at $15.93 million or $0.21 per share, representing increases of 32.8% and 31.3%, respectively, over the prior-year quarter.
Street expects ATEN’s revenue for the first quarter (ending March 2025) to increase 4.5% year-over-year to $63.39 million. Its EPS for the same period is expected to come in at $0.19, up 9.7% year-over-year. In addition, ATEN has topped the EPS estimates in three of the trailing four quarters.
The stock has gained 35.3% over the past nine months to close the last trading session at $18.94.
ATEN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B for Momentum. Within the same B-rated industry, it is ranked #10. To access ATEN’s Growth, Value, Stability, and Sentiment ratings, click here.
Stock #1: Digi International Inc. (DGII)
DGII provides IoT connectivity solutions, including cellular routers, embedded wireless modules (Digi XBee), and cloud-based management services like Digi Remote Manager. The company operates in two segments: IoT Products & Services and IoT Solutions.
On January 9, 2025, SmartSense by Digi launched SmartSense VOYAGE, an advanced IoT platform offering real-time tracking and environmental monitoring of moving assets across the supply chain. Targeting industries like retail, healthcare, and food service, the solution addresses critical needs for asset management and visibility. This innovative launch strengthens DGII’s position in the growing IoT market, enhancing its future growth prospects.
On January 7, DGII launched Digi X-ON, an edge-to-cloud IoT solution designed to provide all necessary components for IoT systems from a single supplier. The solution offers secure, reliable, and scalable edge-to-cloud IoT solutions to drive fast, measurable results and ROI for customers.
DGII reported total revenue of $105.05 million during the fourth quarter that ended September 30, 2024. Its operating income grew 10.5% from the year-ago value to $14.90 million. In addition, the company’s net income amounted to $11.86 million or $0.32 per share, reflecting increases of 86.4% and 88.2% from the prior year’s quarter, respectively. DGII’s adjusted EBITDA came in at $26.25 million, up 5.3% year-over-year.
Street expects DGII’s EPS for the fiscal 2025 first quarter (ended December 2024) to increase 3.3% year-over-year to $0.50, while its revenue for the same period is expected to amount to $104.08 million. In addition, it surpassed the EPS estimates in each of the trailing four quarters, which is excellent.
Shares of DGII have gained 21.2% over the past year and 16.6% over the past six months to close the last trading session at $30.79.
DGII’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Momentum, and Quality. Of the 46 stocks in the same industry, it is ranked #4. Click here to see DGII’s ratings for Value, Stability, and Sentiment.
What To Do Next?
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VIAV shares were unchanged in premarket trading Tuesday. Year-to-date, VIAV has declined -3.86%, versus a 2.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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