The Internet Software and Services space is gathering momentum owing to robust IT spending on solutions that support hybrid operating environments. The level of technology adoption by businesses and the proliferation of connected consumer devices, which might help people connect and do business online, is also accelerating the industry's growth.
Outstanding penetration of mobile devices among users makes sense for businesses to invest heavily in web-based infrastructure, applications and security software. Within the Technology sector, the Zacks-defined Internet Software industry is currently in the top 13% of the Zacks Industry Rank.
In the past year, the industry has provided 48.9% returns. Year to date, it has advanced 43.9%. Since the industry is ranked in the top half of Zacks Ranked Industries, we expect the Internet Software industry to outperform the market over the next three to six months.
The Internet software industry is benefiting from continued demand for a global digital transformation. Growth prospects are alluring primarily due to the rapid adoption of Software as a Service (SaaS), which offers flexible and cost-effective delivery of applications.
SaaS attempts to deliver applications to any user, anywhere, anytime and on any device. It has effectively addressed customer expectations of seamless communications across multiple channels, including voice, chat, email, web, social media and mobile.
The growing need to secure cloud platforms amid rampant incidences of cyber-attacks and hacking is driving demand for web-based cybersecurity software. As enterprises continue to move their on-premise workload to cloud environments, application and infrastructure monitoring is gaining importance. This is increasing the demand for web-based performance management monitoring tools.
5 Must-Buy Internet Software Stocks
These five stocks have strong growth potential for 2025 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Fortinet's third-quarter results reflect strength in demand from large enterprise customers and growth in its security subscriptions amid a slowdown in networking products, along with challenges in sales execution and marketing efficiency. Continued deal wins, especially those of high value, are the key driver of FTNT.
Higher IT spending on cybersecurity is further expected to aid FTNT in growing faster than the security market. The focus on enhancing FTNT's unified threat management portfolio through product development and acquisitions is a tailwind.
Fortinet has expected revenue and earnings growth rates of 12.1% and 5.3%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 8.3% over the last 60 days.
Twilio Inc.
Twilio is benefiting from accelerated digital transformations amid a growing hybrid working trend. TWLO's selective acquisitions and strategic investments in businesses and technologies are enhancing its product portfolio and fortifying its global presence.
TWLO is not only gaining traction from a solid expansion of its existing clientele but also first-time deals with new customers due to its firm focus on introducing products and a go-to-market sales strategy. TWLO's ongoing cost-saving initiatives are driving profits and margins, which is praiseworthy.
Twilio has expected revenue and earnings growth rates of 7.6% and 18.1%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 10.5% over the last 60 days.
monday.com Ltd.
monday.com develops software applications in the United States, Europe, the Middle East, Africa, and internationally. MNDY provides Work OS, a cloud-based visual work operating system that consists of modular building blocks used and assembled to create software applications and work management tools.
MNDY also offers product solutions for work management, sales CRM, software development verticals, business development, presale, and customer success services. MNDY serves organizations, educational or government institutions, and distinct business units of an organization.
monday.com has expected revenue and earnings growth rates of 25.6% and 11.7%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 10.9% over the last 60 days.
Toast Inc.
Toast operates a cloud-based digital technology platform for the restaurant industry in the United States and Ireland. TOST offers Toast POS, a software module that integrates payment processing with point-of-sale functionality, Toast Invoicing, which allows restaurants to send invoices and collect payment, Toast Mobile Order & Pay, Kitchen Display System software that connects the house with the kitchen staff, and Multi-Location Management.
TOST also provides Toast Flex, hardware for on-counter order and pay, Toast Go, an integrated handheld POS device, Toast Tap, a card reader for accepting EMV-contactless payments, Toast Online Ordering & Toast TakeOut, First-Party Delivery, POS integration for restaurants using third-party delivery services to order intake and eliminate the need for extra third-party tablets, and loyalty, email marketing, and Toast Gift Cards services.
Toast has an expected revenue and earnings growth rate of 24.2% and more than 100%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 5.1% over the last 30 days.
Olo Inc.
Olo operates an open SaaS platform for restaurants in the United States. OLO's platform enables on-demand digital commerce operations, which cover digital ordering, delivery, front-of-house management, and payments. OLO's solutions include Order, a suite of solutions powering restaurant brands' on-demand commerce operations, enabling digital ordering, delivery, and channel management through ordering, dispatch, rails, switchboard, network, virtual brands, kiosk, catering, and sync modules.
OLO's Engage offers a suite of restaurant-centric marketing solutions that optimized guest lifetime value by strengthening and enhancing restaurants' direct guest relationships, through the guest data platform, marketing, sentiment, and host modules. OLO's Pay, provides a frictionless payment platform that enables restaurants to grow and protect their digital business through a customer payment experience that offers advanced fraud prevention to improve authorization rates for valid transactions, and increase basket conversion through its Olo Pay module.
Olo has an expected revenue and earnings growth rate of 16.4% and 23.2%, respectively, for 2025. The Zacks Consensus Estimate for 2025 earnings has improved 16.7% over the last 60 days.
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