The tech sector is well-known for innovation. Indeed, most investors who want growth focus on names in the software, subscriptions and services areas of the tech market. Recurring revenue streams and pricing power are among the key facets that make the Magnificent 7 stocks so intriguing. These companies have been able to maintain sky-high margins for a very long time, with no end in sight.
The thing is, picking mid-tier companies that could vie for a similar position one day is where the real money lies. Of course, finding the next tech superstar isn’t easy, and it’s what every investor is trying to do.
That said, it’s my view that investors simply need to follow the innovation in the tech space, and returns should generally follow. Consumers will reward companies that provide excess value, and those companies should reward investors over time. Here are three innovative tech stocks I think fit that bill right now.
Zoom Video (ZM)
Having its best years during the pandemic, Zoom Video (NASDAQ:ZM) has seen immense growth and popularity for the simple reason that more folks are working from home than ever. The company’s offerings were in the right place at the right time, with virtual meetings and work-from-home video setups becoming commonplace. Unsurprisingly, the company’s revenue spiked during 2021 and 2022, and has come back down to earth somewhat since then.
That said, the company isn’t sitting on its hands. There’s plenty of competition building in this space from the likes of Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG, NASDAQ:GOOGL), who are expanding their video conferencing platforms, while Zoom has faced some challenges.
Although Zoom saw a 3% increase in 2024, its aggressive cost-cutting strategies boosted its EPS by 16%. Moreover, the company started a buyback program worth $1.5 billion and repurchased $150 million shares in Q1 2025.
During Q1 2025, Zoom exceeded estimates by 1.2% and EPS by 13.5%. Revenue sat at $1.14 billion, surpassing the $10 million projection. Moreover, adjusted earnings rose $1.35 per share, while projections only anticipated $0.16. The company also projects a 3.4% average annual revenue growth until 2027.
If Zoom can continue to grow profitably and focus on innovation for its core suite, this is a stock that could see growth accelerate in the years to come.
Shopify (SHOP)
Among the biggest e-commerce platform providers in the world, Shopify (NYSE:SHOP) has seen impeccable revenue growth and profitability in recent quarters. This most recent quarter saw the company bring in revenue of $1.9 billion and turnaround free cash flow to $232 million. The company also expects low growth for Q1 2025, but this doesn’t put away the fact that Shopify is a growth stock to own and hold for the years to come.
Shopify’s stock exhibits high volatility, with 18 significant moves over the past year. The stock’s most recent movement suggests the market deems the news noteworthy but not altering the business perception. Despite Q2’s anticipated high-teens revenue growth, narrower-than-usual beats on GMV and revenue raised concerns. However, the company’s earnings per share have surpassed expectations, and improved gross margin and positive cash flow were positive highlights amidst mixed results.
Oracle (ORCL)
The AI sector’s bullish momentum remains strong, with projections estimating a $15.7 trillion contribution to the global economy by 2030. Key players like Nvidia, Microsoft, Google and Amazon (NASDAQ:AMZN) have dominated early gains, but investors seek emerging companies like Oracle (NASDAQ:ORCL) for AI exposure.
Oracle maintained consistent growth, with revenue increasing at a compound annual growth rate of 5.92% over the past five years. In its latest fiscal Q3, revenue surged by 7% to $13.3 billion, driven by a 12% yearly rise in its core cloud services and license support business, accounting for over 75% of total revenues. EPS rose by 16% to $1.41, surpassing estimates for the fifth consecutive quarter, with remaining performance obligations increasing by 29% to $80 billion.
Team IM, an Oracle data center partner, is set to launch its sovereign cloud services in New Zealand on August 1st. Director Ian Rogers reported that all hardware is in place, and the Team Cloud project is running about two weeks ahead of schedule. The company aims to be the first hyperscaler to launch locally, with preparations also underway for a second region in Auckland North. Oracle executives are expected to attend the launch event on July 23rd.
On the date of publication, Chris MacDonald did not hold (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.
