When you think about investing, it is for the up-and-coming future. And the future is tech from 5G to seamless global payments and trade, to self-driving cars and artificial intelligence (AI). Anything that dares to change the future brings significant returns and also risks. Those who believed and invested in e-commerce and cloud computing in 2007–2010 are now sitting on millions of dollars.
The recent AI boom has materialized Nvidia’s 2016 AI dream. Those who invested US$10,000 in Nvidia in 2016 are sitting on a portfolio of over $428,700. And this portfolio has more room to grow in the coming 10 years.
Two up-and-coming tech stocks to buy in June
While Nvidia stock has become expensive, there are a few up-and-coming tech stocks you won’t want to ignore. They have the potential to grow your money exponentially.
Nuvei (TSX:NVEI) is a global payments platform that earns revenue from transaction fees. The more transactions happen on the platform, the higher its revenue. But this model is cyclical as 90% of its transactions come from e-commerce, where volume is high in the holiday season. Nuvei has a presence in digital products and crypto-related transactions, but they are a small part of the business.
The platform company has stepped up its operations by acquiring the integrated software and payments platform Paya. Paya’s client base includes big enterprises and governments that conduct large-scale global payments. The problem with large corporate clients is they have an internal Enterprise Resource Planning (ERP) system that performs several tasks other than payments. As they invested a significant amount in ERP, they are less flexible to newer platforms.
With Paya, Nuvei can integrate its platform into the ERP of corporate clients, opening up a whole new client base that is stable and can generate recurring revenue. Nuvei recently signed up with names like Radisson Hotel Group, Virgin Atlantic, and Selina Hospitality. The Paya acquisition will effectively diversify its revenue streams and reduce e-commerce cyclicality. Moreover, any future crypto booms or possible adoption of the crypto in global trade could make Nuvei a pioneer and trigger an Nvidia-like growth story.
While the future is bright, things are challenging in the short term. Paya is a US-based company. With the debt crisis and a looming recession haunting the neighbourhood, anything with US exposure is sliding downhill. Also, Nuvei reported an $8.3 million net loss in the first quarter due to acquisition-related expenses. These factors could keep Nuvei stock under pressure this year, making it a stock to buy and hold for extraordinary returns.
The fast-changing tech world has made cybersecurity companies like BlackBerry (TSX:BB) the need of the hour. All those sci-fi movies showing that AI is growing stronger could become a reality if AI starts thinking for itself. ChatGPT is just the beginning of generative AI creating content and code. The more technology advances, the greater the need to control it. BlackBerry is a pioneer in embedded security solutions. Undoubtedly, the proliferation of ChatGPT and other AI devices could trigger the long-awaited cybersecurity opportunity.
I have been bullish on BlackBerry throughout the first half. Three things that kept BlackBerry stock under pressure were the tech stock sell-off, delays in government cyber security spending, and weakness in automotive sales. But these pressures are gradually easing. The company used this time to diversify its cyber security client base across non-government clients, which could bring in higher recurring revenue.
BlackBerry reiterated its FY24 revenue forecast of $665 million to $700 million (up 7-12%), driven by growth in the cybersecurity business in the second half. Moreover, the company has a $640 million QNX royalty backlog that will materialize once automotive sales pick up.
The two tech stocks have short-term downsides, but their long-term growth potential makes them a buy-and-hold. These stocks could see a trigger and jump 30–50% in days.