3 Tech Stocks You Can't Miss in This Market Cycle

Key Points

• Three stocks in the digital space shouldn't be ignored by investors. They represent some of the most popular factors in a volatile environment.
• With Wall Street analysts expecting double-digit upside, these growth stories make sense.
• Institutional capital likes this list, and markets are willing to pay up premiums for them.

There comes a point in each stock market cycle when most investors begin to focus on a specific type of company to target. In the past, these companies might have been the tried-and-tested commodities of everyday life, but today’s market is much more focused on names that offer some of this stability with an additional growth factor, which is where the technology sector comes into play.

Technology has also evolved since those times, making today’s companies the sort of everyday commodities that can provide portfolios with the stability and upside any investor would want to see during volatile times, such as the current S&P 500. With geopolitical risks escalating in the Middle East and ongoing trade tariff negotiations in the United States, it appears that only one business model remains safe from all this today.

These business models are focused on software that is not only part of everyday life but also carries the attractive factor of subscription revenues. That is why names like Reddit Inc. NYSE: RDDT, Spotify Technology NYSE: SPOT, and Roku Inc. NASDAQ: ROKU come to give investors the sort of promise that they have been looking for during these highly volatile environments.

An Undeniable Discount in Reddit Stock

Now that shares of Reddit have traded down to only 51% of their 52-week highs, it is obvious that the stock is in a deep discount. However, that price action alone is no reason to start buying blindly, as there must be other factors (fundamentally focused) to drive the stock back to its former glory highs.

The business model is one factor. Although it doesn’t quite fit the subscription model, it deserves mention because it supports one of the hottest trends in technology today: the development of artificial intelligence specifically tailored to large language models (LLMs).

Much bigger companies like Alphabet Inc. NASDAQ: GOOGL rely on Reddit’s natural language environment to provide them with ways to train their chat agents to serve incoming users. Those who wonder why a platform like Twitter (now X) can’t do the same should note that Reddit strictly prohibits any language that is geared toward selling or advertising.

Therefore, this is as natural and as “human” as it gets, creating massive value for these larger players to pay for access to Reddit’s data. Seeing double and even triple-digit growth rates in user bases and time spent on the platform (according to recent quarterly data), investors can see how this might become a massive profit center for the company.

Alan Gould, an analyst at Loop Capital, is well aware of this. As of mid-June 2025, he had reiterated a Buy rating on Reddit stock, assigning a $200 per share price target to call for 69.5% upside potential from its current trading price.

The More Stable Model Goes to Spotify

There is a reason Spotify now trades near its 52-week high, unlike the other names on this list. This is the purest social play there is, considering that no user wants to be caught listening to advertisements among friends during a hangout or long car drive. That peer pressure is the beauty behind Spotify’s model.

This is why the stock has managed to retain its high prices, despite the significant declines seen across the sector and the broader S&P 500. In terms of upside, some institutional buyers believe there is still a chance to reach a new 52-week high down the line.

Allocators from UBS Asset Management decided to increase their holdings in Spotify stock by 39.9% as of mid-May 2025, bringing their entire position to $648.4 million today and also signaling confidence that an even brighter future might await the stock in the coming months.

For a Premium Name, Choose Roku

There is a reason Roku trades at a price-to-book (P/B) ratio of up to 4.4x today compared to other streaming and television stocks. This valuation demands a significant premium compared to its peers, which are valued at just 1.5 times on average.

While some might call this overextended and expensive, seasoned investors and traders will remind these critics that the market is always willing to pay up for the companies it believes will outperform peers and the broader market. The reasoning behind this belief can be attributed to the same themes that underpin the other names on this list.

Roku is now a commoditized service that is also young enough to continue delivering explosive user growth, which is reflected in its financial profile. Additionally, the subscription revenue model enables management and Wall Street analysts to predict future numbers and valuations with greater accuracy and confidence.

This is why JMP Securities analyst Matthew Condon decided to maintain his Market Outperform rating on Roku stock as of early June 2025, also placing a valuation target of up to $95 per share on the company. Relative to today’s prices, which are only 71% of the 52-week highs, this view offers investors a rally of as much as 30% to align their portfolios with some explosive moves.