We recently published a list of the 8 Best Long Term Tech Stocks To Invest In Now. In this article, we are going to take a look at where Joint Stock Company Kaspi.kz (NASDAQ:KSPI) stands against the other best long term tech stocks to invest in.
The technology sector came to the market’s rescue in 2023 after the disastrous macroeconomic conditions of 2022. Investments in advanced technologies like generative AI continue to show strong potential for future business growth.
According to CNBC’s Q3 CFO Council survey, 48% of the CFOs said that the tech industry’s growth will outperform all other sectors over the next six months. Moreover, in a September 23 interview with CNBC, Investment Management Partner at Callan Family Office, RaeAnn Mitrione highlighted that the tech sector has been a major beneficiary of the recent Fed rate cut. Lower interest rates are favorable for tech companies, which often thrive in such environments.
The ongoing AI theme has also been a key driver of tech’s strong performance. Additionally, she mentioned that mega-cap tech stocks were previously seen as a safe haven during economic uncertainty, but as the rate environment shifts, the focus may broaden to include smaller, more economically sensitive sectors. Nonetheless, tech’s strong momentum, fueled by AI, is likely to persist for some time.
Optimism in Global Tech Spending for 2024
According to Deloitte’s 2024 technology industry outlook, global tech spending slowed due to high interest rates, economic concerns, and geopolitical issues in 2023. However, optimism is growing for 2024, with projected global IT spending growth of 5.7% to 8%. Some of the growth areas include software, IT services, and AI investments, with AI spending potentially reaching $200 billion by 2025. Cloud computing and cybersecurity are also expected to see strong demand.
The report states that Gen AI is gaining traction but it is expected to grow modestly in 2024, yet more strongly in 2025, with its integration into software and business processes driving productivity and efficiency. AI hardware demand is set to exceed $50 billion next year, while companies continue exploring AI monetization strategies.
Harnessing AI for Greater Energy Efficiency
Additionally, the growing influence of big tech companies and the increasing reliance on AI have led to a significant rise in energy demand. We discussed this in our article about the 13 Best Big Tech Stocks To Buy Now. Here is an excerpt from the article:
“A recent notable trend that people have begun to see because of the rise of big tech companies and the growing use of AI is a greater demand for power. Many major tech companies are beginning to require more energy, with the AWS-owner going as far as buying a nuclear-powered data center for $650 million recently.
The primary driving force for this rising demand is the need to develop AI. Many energy-conscious investors may see this new trend as a red flag for big tech. However, Jensen Huang has noted that while AI takes a ton of energy to train, once developed and trained, it will also help save energy. He particularly noted that AI is going to become so advanced through this development that it will eventually end up offering solutions that can change the way we use energy, making our operations endlessly more energy efficient.”
While concerns about the electricity needed to power AI are justified, according to industry pioneers like Nvidia CEO Jensen Huang, the technology itself will help solve that problem.
Our Methodology
For this article, we used the Finviz stock screener to identify 27 tech stocks with market caps of above $10 billion, Buy or Buy-equivalent ratings from analysts, and over 20% average price target upside. We narrowed our list to 8 stocks with the highest average analyst price target upside as of September 26. The best long term tech stocks are listed in ascending order of their average analyst price target upside.
We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An executive in a suit checking a bank of computers symbolizing the technology of the financial services industry.
Joint Stock Company Kaspi.kz (NASDAQ:KSPI)
Average Analyst Price Target Upside: 46.76%
Number of Hedge Fund Holders: 25
Joint Stock Company Kaspi.kz (NASDAQ:KSPI) is making significant strides in the financial technology and e-commerce landscape of Kazakhstan. It has a strong suite of services, including payments, marketplace solutions, and fintech offerings.
The company’s comprehensive super app caters to both consumers and merchants. The platform integrates cashless payments, personal finance management, e-grocery shopping, travel bookings, and access to various government services, all of which enhance user convenience and promote high levels of engagement.
As a result, a substantial portion of Kazakhstan’s population regularly interacts with the app, which shows its central role in daily financial activities. The company made headlines in January 2024 with a successful initial public offering (IPO) on the Nasdaq, raising over $1 billion and marking a historic moment as the first Kazakh company to debut on this exchange.
The IPO valued Kaspi.kz (NASDAQ:KSPI) at approximately $17.5 billion, further solidifying its status. It ranks 4th on our list of the best long term tech stocks to invest in now.
The continuous innovation within the app, including the launch of Kaspi Travel and Kaspi Classifieds, alongside established services such as buy now, pay later and person-to-person money transfers, demonstrates the company’s commitment to meeting diverse consumer needs.
Financially, it has shown remarkable growth. In the second quarter, net income increased by 25% compared to the previous year, while revenue for the first half of 2024 surged by 38%, reaching KZT1.2 trillion (1 KZT = US$0.0021 as of September 26).
The payments and marketplace segments were crucial to this success, contributing 68% of net income. A focus on maximizing transaction intensity led to impressive increases in transaction volumes, with a 46% rise in the second quarter and a 44% increase for the first half of 2024. The growth of Kaspi Pay transactions and the rapid adoption of B2B payments, along with the sustained popularity of bill payments, played important roles in these achievements.
User engagement metrics further highlighted the app’s success, with an average of 72 transactions per active consumer per month, positioning the Kaspi.kz’s (NASDAQ:KSPI) Super App as one of the most engaged major mobile applications globally, as per the company. Its competitive edge is significantly supported by this large and active customer base.
Additionally, Kaspi’s e-Grocery service is expanding rapidly, having increased its gross merchandise volume by 99% year-over-year and reaching around 639,000 active consumers during the quarter. The recent expansion into Shymkent, Kazakhstan’s third-largest city, indicates strong growth potential in this sector.
As of the first half of 2024, the company boasts a payments platform with 721,000 merchants and a marketplace platform serving 7.6 million consumers. Moreover, as per 9 analysts, the stock has a consensus Buy rating. The average price target of $152.80 represents an upside of 46.76% to its price on September 26.
With its impressive growth trajectory, continuous innovations, and extensive user engagement, the company is well-positioned for continued success in the dynamic fintech landscape of Kazakhstan.
Overall, KSPI ranks 4th on our list of the best long term tech stocks to invest in. While we acknowledge the potential of KSPI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KSPI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.