Mega-cap tech titans have led the way for the tech sector rebound, but what about the rest of the pack? As the rally cools off and begins to broaden out further, it’s the smaller, beaten-down tech stocks that operate in large and growing markets, such as SNOW, WIX, and DKNG (although it’s technically considered a consumer cyclical stock), that may be next up to realize their upside potential.
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Therefore, let’s check in with TipRanks’ Comparison Tool to stack up three still-ailing tech stocks that continued to win the approval of Wall Street analysts, given their Strong Buy ratings.
Snowflake (NYSE:SNOW)
Snowflake is a data warehousing company that’s really expanded its ecosystem of data products in recent years. Indeed, big data, data analytics, artificial intelligence (AI), and cybersecurity are major tech trends that could allow Snowflake to scale up its growth at an impressive pace over the coming years. It’s these trends that keep me bullish on the firm, even as other investors dismiss the stock for its seemingly rich price tag.
The company’s usage-based model may have worked against it as corporations slashed their IT budgets. However, as the economic tides turn and demand for data stores and services become more vital in the generative and predictive AI age, it’s hard to count Snowflake out.
At this juncture, it’s difficult to gauge just how large Snowflake’s TAM could be. Data (even aged data) is a precious commodity worth mining into for value in the form of business insights. Further, as more companies embrace generative AI technologies, like large language models (LLMs), firms will need a proper foundation to build and train their models.
Indeed, Snowflake is a standout player in the AI age that stands to really make up for lost time once firms are forced to raise their IT budgets again. There’s a growing amount of data to store and even more lakes of data for firms to swim through.
Finally, Snowflake may have the means to penetrate the cybersecurity market in a major way. The company’s cybersecurity workload for cloud data is particularly intriguing, with features allowing security teams to get a step ahead of attackers.
All things considered, Snowflake is one of the few high-multiple growth stocks that is more than able to grow into its multiple. In addition to organic innovations, Snowflake could acquire small firms to further enhance its ecosystem for an era where data science, data stores, and analytics are no longer just a nice-to-have but a must-have to stay on par with the competition.
The stock trades at 158.7 times forward price-to-earnings, above and beyond the application software industry average of around 30 times. At such elevated levels, the stakes are certainly high, but so too are the growth prospects. If Snowflake can perfect a business model behind the data cloud, I have no doubt that there’s a big chance SNOW stock could prove undervalued once customers are ready to ramp up on usage.
What is the Price Target of Snowflake Stock?
Snowflake’s a Strong Buy on TipRanks, with 19 Buys and five Holds assigned in the past three months. The average SNOW stock price target of $192.60 implies 35.3% upside potential.
Wix (NASDAQ:WIX)
Wix is an Israeli firm behind its popular cloud-based web builder. The stock endured a painful landing in 2021 and 2022, eventually shedding around 83% of its value at its worst. At $81 and change, WIX stock seems modestly priced at just 18.6 times forward price-to-earnings, well below the infrastructure software industry average of around 25 times.
In a prior piece, I highlighted that generative AI could be a secret weapon that makes the intuitive web builder far better. I continue to believe that Wix has a better product than many rivals, and I expect AI could be a tool that helps Wix claw market share away from rivals.
With generative AI and automated coders, it’s hard not to be excited about the next chapter of Wix’s growth story. I think the narrative can only get better from here. UBS analysts are upbeat on Wix (and some of its web-builder peers) over the monetization potential of generative AI. Currently, Chris Kuntarich of UBS has a $125.00 price target, which entails upside of around 53%.
The web-builder space may be getting crowded, but if Wix can get generative AI right, it can certainly turn the tables back in its favor. Until then, it seems like few investors are willing to give the firm the benefit of the doubt.
What is the Price Target of WIX Stock?
Wix is a Strong Buy, according to analysts, with 15 Buys and four Holds assigned in the past three months. The average WIX stock price target of $117.82 entails 44.1% upside.
DraftKings (NASDAQ:DKNG)
The global gaming market has been dominated by the big-name casino firms. However, as we continue moving into the digital age, it’s not hard to imagine DraftKings and other digital-only gambling firms taking share away from the gaming leaders of yesteryear.
Indeed, there’s a lot on the line if legacy gaming leaders fail to keep up with their digital counterparts. And though DKNG stock has been a losing bet for most investors who got in prior to December 2022, I’d argue the firm’s fortunes have changed for the better. The good times may not be over yet as DraftKings trims costs without cutting into its growth. Given the trajectory, I remain incredibly bullish on DKNG’s turnaround.
DraftKings stock heated up following a notable upgrade from MoffettNathanson’s Robert Fishman, who hiked the name from Hold to Buy, also increasing the price target from $31 to $37. Fishman sees a pathway to profitability and a “closing the market share gap” with some of its larger rivals (think FanDuel) in the space. If DraftKings can smoothly transition into profitability within the next two years, shares could prove incredibly cheap here.
What is the Price Target of DraftKings Stock?
DraftKings stock is a Strong Buy on Wall Street, sporting 21 Buys, four Holds, and one Sell rating. The average DKNG stock price target of $36.54 implies 33.6% upside potential.
The Takeaway
If the tech scene broadens out, it could pay to consider some of the less-respected disruptors with shares that are still off considerably from their highs. Of the three names in this piece, analysts see the most upside (around 44%) from WIX stock.
