Wall Street favors technology firms in 2023, but not all of them. Just look at Block (NYSE:SQ) stock, which is trading near its lowest point this year.

While the sentiment surrounding Block is negative, that’s a signal for contrarian investors to consider buying some shares.

Actually, it’s the “Magnificent Seven” stocks that have been flying high and garnering analyst upgrades. Many investors and commentators have given up on Block, but that’s a mistake.

Block can still improve when it comes to reducing its expenditures. However, overall the company is on the right track and could stage a comeback soon.

SQ Stock’s Rapid Decline

At the end of July, SQ stock was above $80 and it seemed like Block would regain favor among financial traders and commentators. However, the stock plunged into the $50s in August.

I don’t feel that this was entirely Block’s fault. The market punished technology stocks in August because government bond yields rose. Thus, Block’s share-price decline doesn’t reflect the company’s actual results.

Block’s results haven’t been perfect. In this year’s second quarter, Block’s operating expenses increased year over year in the sales and marketing, product development, and general and administrative categories.

Block reported year-over-year increases in its total cost of revenue, as well as in its total operating expenses. In the future, investors should want to see Block publish a plan to reduce its financial outlays.

Block’s Cash App Steals the Show

If Block can cut its costs, it might report a quarterly profit. At least, we can say that Block is getting closer to profitability. That’s because the company’s net loss attributable to common stockholders declined from $208.014 million in the year-earlier quarter to $122.506 million in Q2 2023.

How did Block reduce its net earning loss? The show-stopper in 2023’s second quarter was the company’s Cash App, which generated a gross profit of $968 million, up 37% year over year.

Impressively, there were 54 million transacting actives on Cash App in just the month of June. That’s up 15% on a year-over-year basis.

So, for generating income from Cash App, I say, “Keep up the good work.” But for spending money on operating activities, I say to Block, “Show me some discipline.”

SQ Stock Has ‘Magnificent’ Potential

A technology stock doesn’t have to be a member of the “Magnificent Seven” to deserve your attention in 2023. I suspect Block is only being ignored in the financial press because SQ stock is down. Yet, Block deserves your attention just as much as the high flyers do.

Don’t get the wrong idea – Block still has some work to do. The company should establish a road map to profitability, and Block ought to concentrate on cutting its costs.

Imagine how high SQ stock could go if Block continues to improve its bottom-line results. I expect the stock to revisit $80 and then go higher. It won’t happen tomorrow or next week, though, so be patient and give Block time to prove itself as a potentially “Magnificent” tech firm in 2023.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.