Whether it's through application software, infrastructure, or fintech payment platforms, software-as-a-service (SaaS) technology stocks are going to continue playing a crucial role in helping business operate in the future.
As companies keep migrating their data to the cloud, and as their customers increasingly interact with them through digitally native platforms, they're going to rely upon such technology even more to be competitive. The following pair of tech stocks are the leaders at what they do and will not only lift up businesses trying to meet their customers on their own terms, but will richly reward the investors who back them.
No one crushes its niche the way Salesforce.com (NYSE:CRM) does in the customer-relationship management (CRM) field. It has a 19.5% share of the revenue spend on CRM applications, according to IDC, or more than the share of Oracle, SAP, Microsoft, and Adobe combined.
The so-called "Salesforce economy" will create 9.3 million jobs and generate $1.6 trillion in new business revenue by 2026. IDC estimates that by partnering with Salesforce, businesses will generate $6.19 for every $1 the CRM leader makes.
With CRM software spending slated for double-digit annual growth through at least the middle of the decade, Salesforce is going to be consuming large amounts of that money. Through its AppExchange, Salesforce has partnered with over 6,700 companies, including 90% of all Fortune 500 companies.
Wall Street is looking for Salesforce to more than double revenue to $43.4 billion by 2025, along with adjusted profits and free cash flow, making its stock a long-term win for investors.
Another stock for far-sighted investors is fintech giant Square (NYSE:SQ), which made a name for itself developing point-of-sale devices for merchants. It has since added functionality and opportunity with analytics and small business loans, and even branching out into cryptocurrency.
I may be a crypto skeptic at the moment (blockchain technology seems to be where the greatest utility can be found), but Square has expanded its capabilities to include peer-to-peer digital payments through its Cash App platform.
Cash App was a beneficiary of the meme stock hubbub earlier this year when rival brokerages limited trading in some of the most popular stocks on the market, leading investors to turn to Cash App to make trades (though it eventually had to limit trading, too). Yet whatever gains it made with meme stocks pales in comparison to what Bitcoin trading and exchange did for the business.
In its fiscal second quarter, Square reported Bitcoin revenue tripled to $2.72 billion, or 58% of the fintech's total $4.68 billion in quarterly net sales, though its profits on Bitcoin only grew 2% to $55 million.
Merchant payments, investing, crypto, and the other channels Square has opened should have its business soaring. Analysts are looking for revenue to double this year and triple by the middle of the decade. Yet with its recently announced acquisition of buy now, pay later giant Afterpay, who knows how far this fintech leader can go?