The technology industry is ever-evolving and ever-expanding, with its innovations branching out in every dimension, including services, chip markets, and consumer-centric markets. Further, with the rapidly surging investment in technology and growing demand, the market is positioned to expand in the coming years.

Given the industry’s rosy prospects, it could be wise to watch fundamentally strong tech stocks: Micron Technology, Inc. (MU), Zoom Video Communications, Inc. (ZM), and Roku, Inc. (ROKU), which could deliver consistent returns in the near term.

In 2024, Worldwide IT spending strongly hinged on the evolution and prevalence of Generative AI (Gen AI) across most of the technology segments and sub-segments. Companies have also observed notable software spending attributable to GenAI this year. In its forecast, Gartner projected worldwide IT spending to exhibit 7.5% growth in 2024, totaling $5.27 trillion.

They were further, buoyed by the recent Federal Reserve rate cut, the market capitalization of many tech firms boosted in September and signed to the possibility of enhanced future profits and cash flows for companies in the market. The market is also fueled by continued enthusiasm for artificial intelligence (AI) among companies and consumers.

Also, upscaling enterprise technology adoption, diversification in the technology space, and continuously rising demand offer wide growth prospects for tech companies of all sizes and types. Hence, many companies are set for a comeback and join the growth rally.

With this, The IT services market is expected to exhibit significant growth and reach $1.81 trillion by 2029, expanding at a CAGR of 8.4%, driven by rising IT expenditures, increasing demand for software-as-a-service and expanding cloud solutions.

Given these encouraging trends, let’s delve deeper into the fundamentals of top tech stocks: MU, ZM, and ROKU.

Micron Technology, Inc. (MU)

MU designs, develops, manufactures, and sells memory and storage products internationally. The company operates in four segments: Compute and Networking Business Unit; Mobile Business Unit; Embedded Business Unit; and Storage Business Unit.

On October 15, MU announced the availability of a new category of clock driver memory by introducing its Crucial® DDR5 clocked unbuffered dual inline memory modules and clocked small outline dual memory modules. MU’s CUDIMM and CSODIMM solutions are the industry’s first commercially available JEDEC-standard DDR5 CUDIMM and CSODIMM solutions.

These solutions are designed to provide more speed stability, faster downloads, and better refresh rates, representing a completely new frontier of memory form factors for next-generation PCs.

MU’s revenue increased 93.3% year-over-year to $7.75 billion for the fourth quarter that ended August 29, 2024. The company’s non-GAAP operating income was $1.93 billion against an operating loss of $4.82 billion during the prior year’s quarter. In addition, the company’s non-GAAP net income and EPS came in at $1.47 billion and $1.30 for the quarter, respectively.

According to the company's business outlook for the first quarter of 2025, MU projects revenue between $8.70 billion, and its EPS is expected at $1.74.

Street expects MU’s revenue and EPS for the second quarter (ending February 2025) to increase 55.4% and 371.4% year-over-year to $9.05 billion and $1.98, respectively. Also, it has surpassed the consensus revenue and EPS estimates in all four trailing quarters.

Shares of MU have surged 25.1% over the past month and 58.1% over the past year to close the last trading session at $109.24.

MU’s solid prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Growth. Within the Semiconductor & Wireless Chip industry, MU is ranked #32 out of 91 stocks.

Click here to access additional ratings of MU for Momentum, Sentiment, Quality, Value, and Stability.

Zoom Video Communications, Inc. (ZM)

ZM provides a unified communications platform internationally. The company offers Zoom Meetings, Zoom Phone, and Zoom Chat. The company also provides Zoom Rooms, Zoom Conference Room Connector, Zoom Events, OnZoom, and Zoom Webinars.

On October 9, ZM and ServiceNow (NOW) expanded their strategic alliance to usher in a new era of intelligence with smarter collaboration and peak productivity across the enterprise. Under the collaborations, the two companies' generative AI (GenAI) technologies will integrate to offer organizations advanced workflow automation for tasks and activities across Zoom and ServiceNow.

On September 24, ZM introduced several new add-on products and functionalities to strengthen its advanced enterprise offerings portfolio for the Zoom platform. The company’s advanced enterprise offerings reflect its commitment to empowering organizations and meeting their compliance, security, privacy, survivability, and manageability requirements.

ZM’s revenues rose 2.1% from the prior year period to $1.16 billion during the second quarter that ended on July 31, 2024. Its gross profit grew marginally from the year-ago value to $877.43 million. The company’s income from operations of $202.37 million indicates growth of 13.9% year-over-year.

In addition, the company’s non-GAAP net income totaled $436.42 million, or $1.39 per share, up 6.6% and 3.7% from the prior year’s quarter, respectively.

Analysts expect ZM’s revenue and EPS for the third quarter (ending October 2024) to increase 2.4% and 1.4% year-over-year to $1.16 billion and $1.31, respectively. Further, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is remarkable.

ZM’s shares have gained 16.3% over the past six months and 9.1% over the past year to close the last trading session at $68.93.

ZM’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Sentiment, Quality, and Value. Within the Technology - Services industry, ZM is ranked #10 among 76 stocks.

In addition to the POWR Ratings we’ve stated above, we also have ZM ratings for Momentum, Growth, and Stability. Get all ZM ratings here.

Roku, Inc. (ROKU)

ROKU operates a TV streaming platform internationally. The company operates through Platform and Devices segments. The company’s streaming platform allows users to find and access TV shows, movies, news, sports, and others.

On October 9. ROKU and Instacart (CART) expand their advertising partnership with new shoppable formats and targeting. The expanded partnership will provide wide-scale and valuable insights required to connect with relevant audiences for consumer-packaged goods (CPG) advertisers.

The interactive ad formats, enhanced targeting capabilities, and closed-loop measurement will allow brands to get more from their advertising efforts and encourage effortless and personalized shopping experiences for consumers.

On September 18, ROKU launched Roku Ads Manager, a direct self-service solution designed for CTV performance. Roku Ads Manager is a custom-built solution to help growth marketers succeed. It includes a CTV first-to-market Shopify integration, allowing for self-service shoppable campaigns.

During the second quarter ended on June 30, ROKU’s total net revenue increased 14.3% year-over-year to $968.18 million. Its gross profit grew 12.3% from the year-ago value to $424.70 million. The company’s adjusted EBITDA came in at $43.64 million compared to the loss of $17.79 million during the prior-year quarter.

According to the company's outlook for the third quarter of 2024, ROKU projects net revenue of $1.01 billion. Its gross profit is expected to be $440 million, and adjusted EBITDA is projected at $45 million.

Analysts expect ROKU’s revenue for the third quarter (ended September 2024) to increase 11.3% year-over-year to $1.01 billion. Its revenue for the fiscal year 2024 is estimated to increase 13.8% year-over-year to $3.97 billion. Moreover, the company surpassed the consensus revenue estimates in all of the trailing four quarters.

ROKU’s stock has soared 34.1% over the past six months and 15.5% over the past year to close the last trading session at $77.56.

ROKU’s POWR Ratings reflect its robust outlook. ROKU has a B grade for Growth. It is ranked #44 among the 58 stocks in the B-rated Consumer Goods industry.

Click here to access additional ROKU ratings for Value, Quality, Sentiment, Momentum, and Stability.

What To Do Next?

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MU shares were trading at $112.12 per share on Thursday afternoon, up $2.88 (+2.64%). Year-to-date, MU has gained 31.77%, versus a 23.69% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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