Tech stocks once again led the overall market in 2023 as concerns about the negative effect of rising interest rates subsided. While large-cap tech stocks get most of the attention on Wall Street, smaller companies may be better buys for risk-tolerant investors seeking larger returns. Companies in this category can be risky, volatile investments due to the unpredictability of new technologies, and they compete with larger, more established companies that can outspend them.
[Sign up for stock news with our Invested newsletter.]
Here are seven of Bank of America’s top tech stock picks for 2024 with market caps of less than $2 billion:
| Stock | Implied upside over Jan. 16 close |
| Zeta Global Holdings Corp. (ticker: ZETA) | 49.6% |
| MeridianLink Inc. (MLNK) | 5.2% |
| Pros Holdings Inc. (PRO) | 23.3% |
| Amplitude Inc. (AMPL) | 12% |
| GDS Holdings Ltd. (GDS) | 131% |
| Weave Communications Inc. (WEAV) | 25.8% |
| 8×8 Inc. (EGHT) | 78.6% |
Zeta Global Holdings Corp. (ZETA)
Zeta Global is a marketing technology platform that specializes in customer data, marketing and advertising solutions. Zeta’s revenue was up 24% year over year in the third quarter, while scaled customer average revenue per user was up 10%, the 13th consecutive quarter of double-digit growth. Analyst Koji Ikeda says Zeta is a leading advertising and marketing technology vendor that is gaining market share from legacy competitors. He says the company has consistently exceeded analyst earnings expectations and regularly raised its financial guidance since its 2021 initial public offering. Bank of America has a “buy” rating and $14 price target for ZETA stock, which closed at $9.36 on Jan. 16.
MeridianLink Inc. (MLNK)
MeridianLink provides loan and mortgage origination software for lenders. In the third quarter, the company reported 7% year-over-year revenue growth and 12% lending software solutions revenue growth. MeridianLink’s $29.8 million in earnings before interest, taxes, depreciation and amortization represented 39% of revenue in the quarter. Ikeda says MeridianLink management has executed well in a difficult, high-interest-rate environment for mortgage and consumer lending. He says the company’s outperformance relative to industry peers and analyst expectations warrants a premium valuation for its stock. Bank of America has a “buy” rating and $24 price target for MLNK stock, which closed at $22.82 on Jan. 16.
Pros Holdings Inc. (PRO)
Pros is a Houston-based company that specializes in pricing optimization. The company’s airline business helps airlines maximize revenue by using algorithms that forecast demand, but PROS also has a substantive business-to-business, or B2B, sales segment. Analyst Frederic Boulan says the COVID-19 crisis underscored the value Pros offers to customers in both its major end markets. The company’s B2B offerings are well positioned to benefit from the rise in online commerce, while its travel segment appeals to companies seeking to optimize their businesses via accurate travel demand forecasting. Bank of America has a “buy” rating and $43 price target for PRO stock, which closed at $34.87 on Jan. 16.
Amplitude Inc. (AMPL)
Amplitude is a digital analytics platform that helps companies maximize the value of their products. The company helps customers collect critical data and use that data to generate valuable insights about their own customers’ behavior, allowing them to produce better, growth-driving products and services. Ikeda says Amplitude is still dealing with pandemic-era contract renewals, which are hurting the company’s revenue, annual recurring revenue and net revenue retention numbers. But Ikeda says Amplitude will continue to gain market share in the large and growing digital optimization market. Bank of America has a “buy” rating and $14 price target for AMPL stock, which closed at $12.50 on Jan. 16.
GDS Holdings Ltd. (GDS)
GDS is the largest carrier-neutral data center operator in China by revenue. The company’s facilities operate primarily in Beijing, Shanghai and other top-tier Chinese cities. Analyst Daley Li says GDS has a leading position in the Chinese data center industry, which includes an impressive client mix of cloud services providers, financial institutions, internet companies and other major Chinese companies. GDS has an impressive backlog that should continue to support growth, and Li says international expansion could be an additional growth lever in the future. Bank of America has a “buy” rating and $14.90 price target for GDS stock, which closed at $6.45 on Jan. 16.
Weave Communications Inc. (WEAV)
Weave operates a customer communications and engagement software platform aimed at helping small- and medium-sized businesses monetize their customer interactions and reduce time and effort devoted to mundane tasks. Analyst Michael Funk says Weave has an attractive valuation relative to other unified-communications-as-a-service, or UCaaS, vendors. Funk says an industry shift to equipment leasing and payments adoption could help Weave exceed growth expectations and boost both margin expansion and revenue growth. However, he says the company’s small size could continue to limit valuation upside. Bank of America has a “buy” rating and $14 price target for WEAV stock, which closed at $11.13 on Jan. 16.
8×8 Inc. (EGHT)
8×8 provides voice, chat, video and contact center software to enterprise customers, government agencies and other organizations. Funk says 8×8 is a market leader in both UCaaS and contact center as a service, and its impressive cloud platform and ability to bundle product offerings position the company to gain enterprise market share over time. He says 8×8’s addressable markets are growing at an impressive clip, and the company has consistently demonstrated its ability to land larger enterprise customers. Bank of America has a “buy” rating and $6 price target for EGHT stock, which closed at $3.36 on Jan. 16.
More from U.S. News
Magnificent 7 Stocks: What They Are and How They Dominate the Market
8 Best Defense Stocks to Buy Now
8 Top Nancy Pelosi Stocks to Buy
7 Best Small-Cap Tech Stocks to Buy originally appeared on usnews.com
Update 01/17/24: This story was previously published at an earlier date and has been updated with new information.
