It goes without saying that overall technology sector is seeing a significant transition with introduction of generative artificial intelligence (AI). All these developments are proved by the significant developments in this sector since roll-out of OpenAI’s ChatGPT, a large language model (LLM). This was launched in November 2022. Platform saw widespread acceptance as numerous users flocked to the model. Alphabet Inc. followed up with Google Bard, resulting in strong competition to several other LLMs.
With strong investments from Microsoft Corporation in OpenAI, around billions of dollars, OpenAI did numerous improvements to the operating model. Apart from this, Microsoft integrated several features of the LLM model in its suite of products. Experts believe that AI is the main reason for the strong performance of Microsoft Corporation’s share price and quarterly results. Best technology companies across the globe have benefitted as technology sector continues to attract billions of dollars in the form of FDIs.
There are numerous companies who continue to work on their own LLMs or they have already rolled-out their own models for a range of purposes. In addition, best technology companies are now focusing on using power of generative AI to streamline the processes, products, services, and experiences, in varied shapes and forms. As a result of this, there has been increased demand for higher computational power and hardware which is needed to operate it. NVIDIA Corporation has been categorised as the biggest beneficiaries of this increase in demand because some of the renowned technology companies are its customers.
Global markets continue to face tough operating environment as a result of higher inflation and aggressive monetary policies which have been implemented by the global central banks. Despite this, 2023 saw the recovery in the technology stocks as NASDAQ-100 index, which is heavily weighted by global technology stocks, lead the game. NASDAQ-100 index saw an increase of ~42.5% YTD. In just 5 days ended 13th November 2023, the index is up by ~2%.
With this in mind, we will now have a look at best technology companies to consider the industry undergoes transformation.
1. Shopify Inc.
The company offers e-commerce platform mainly to the small and midsize businesses.
It announced its financial results for the quarter ended September 30, 2023, with gross merchandise volume of the company rising ~22% to $56.2 billion, exhibiting a rise of $10.0 billion in comparison to the 3Q22. Total revenue of the company went up by ~25% to $1.7 billion against the prior year, equating to year-over-year growth of 30%. This was seen after adjusting for ~500 bps impact from the sales of the company’s logistics businesses.
Merchant Solutions revenue grew by 24% to $1.2 billion in comparison to the prior year, mainly because of the growth of GMV and Shopify Payments. Gross payments volume increased to $32.8 billion, exhibiting 58% of GMV processed in 3Q, versus $25.0 billion, or 54%, for 3Q22.
For FY23, the company expects full-year revenue to increase at the mid-twenties percentage rate on year-over-year basis. This is expected to be supported by 4Q revenue growth of high-teens year over year, equating to the year-over-year rate of growth of low-to-mid-twenties if we exclude 400 – 500 bps impact as a result of the sales of logistics businesses.
On the YTD basis, the company’s stock saw an increase of ~82.46%.
2.IonQ, Inc.
The company has been categorised as the leader in quantum computing, which has a track record of innovation and deployment.
In 3Q, it recognized revenue of $6.1 million, which was above the high-end of the range which was provided earlier. This represents ~122% growth in comparison to $2.8 million in the prior-year period.
The company achieved $26.3 million of new bookings for 3Q, and $58.4 million YTD as of September 30, 2023. Cash, cash equivalents and investments of the company came in at $485.1 million as of September 30, 2023. Net loss of the company came at $44.8 million, with adjusted EBITDA loss coming at $22.4 million for 3Q. Exclusions from adjusted EBITDA consist the non-cash loss of $7.6 million related to the change in the fair value of the company’s warrant liabilities.
It announced the new $25.5 million deal with existing customer AFRL. This was to deploy 2 barium-based trapped ion quantum computing systems for quantum networking research and application development.
For FY23, the company has increased its revenue outlook range to $21.2 million – $22.0 million. For 4Q, the company expects revenue of between $5.3 million and $6.1 million.
On the YTD basis, the stock increased by ~250%.
3.Affirm Holdings, Inc.
The company offers platform for digital and mobile-first commerce.
It released financial results for fiscal 2024 first quarter ended September 30, 2023, with total revenues of the company coming at $496.5 million. GMV of the company was $5.6 billion, exhibiting a rise of 28% year-over-year as compared to the 4Q23. Total revenue of the company was $497 million, up by 37% year-over-year.
Total funding capacity as of the end of the quarter grew as compared to 4Q23 by $1.4 billion, to the total of $13.1 billion. The company added meaningful capacity throughout all of its funding channels. As of September, it had $2.1 billion in total liquidity.
The company expects to realize year-over-year increases in weighted-average APRs for interest-bearing loans. For FY24, the company expects GMV of over $24.25 billion. Adjusted operating margin of the company is expected to be over 5%. It anticipates higher consumer demand for the financing products in 4Q of the calendar year.
Affirm Holdings, Inc. saw an increase of ~183.19% on the YTD basis.
Conclusion
The above-explained best technology companies lead their respective market segments and industries. These companies continue to hold strong competitive advantage as compared to their peers on the basis of strong technological capabilities. These companies have healthy fundamentals and they have showed strong growth in past. These companies are expected to make breakthroughs moving forward too.
Best technology companies continue to benefit from AI boom in one form or some other form.
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