The Internet Software and Services space is gathering momentum owing to robust IT spending on solutions that support hybrid operating environments. Outstanding penetration of mobile devices among users makes sense for businesses to invest heavily in web-based infrastructure, applications and security software.
Within the Technology sector, the Zacks-defined Internet Software industry is currently within the top 37% of the Zacks Industry Rank. Since the Internet Software industry is ranked in the top half of Zacks Ranked Industries, we expect it to outperform the market over the next three to six months.
We recommend five stocks from this space that have strong potential for 2025. These are — Affirm Holdings Inc. AFRM, Five9 Inc. FIVN, Unity Software Inc. U, Olo Inc. OLO and StoneCo Ltd. STNE.
Internet Software Industry Thriving
The Internet software industry is benefiting from continued demand for a global digital transformation. Growth prospects are alluring primarily due to the rapid adoption of Software as a Service (SaaS), which offers flexible and cost-effective delivery of applications.
SaaS attempts to deliver applications to any user, anywhere, anytime and on any device. It has effectively addressed customer expectations of seamless communications across multiple channels, including voice, chat, email, web, social media and mobile.
The growing need to secure cloud platforms amid rampant incidences of cyber-attacks and hacking is driving demand for web-based cybersecurity software. As enterprises continue to move their on-premise workload to cloud environments, application and infrastructure monitoring is gaining importance. This is increasing the demand for web-based performance management monitoring tools.
5 Must-Buy Internet Software Stocks
These five stocks have strong growth potential for 2025 and have seen positive earnings estimate revisions in the last 60 days. These stocks have strong short-term price upside left. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Zacks Investment Research
Image Source: Zacks Investment Research
Affirm Holdings Inc.
Affirm Holdings has achieved strong revenue growth through diverse income streams, including merchant network fees, interest from loans and virtual card revenues. AFRM expects revenues to be in the range of $3.13-$3.19 billion in fiscal 2025. Growing active merchant numbers, improving gross merchandise value, and the average balance of loans are driving merchant network revenues and interest income.
Key partnerships, like those with Apple Pay and Hotels.com, play a vital role in AFRM’s expansion. It has officially expanded to the United Kingdom, through a partnership with Alternative Airlines. Tapping into industries like travel, hospitality, and technology bode well for AFRM.
Massive Short-Term Price Upside for AFRM Stock
Affirm Holdings has an expected revenue and earnings growth rate of 36.9% and 96.4%, respectively, for the current year (ending June 2025). The Zacks Consensus Estimate for the current-year earnings has improved 60% in the last 30 days.
The average short-term price target of brokerage firms represents an increase of 76.4% from the last closing price of $40.49. The brokerage target price is currently in the range of $50 to $86. This indicates a maximum upside of 112.4% and no downside.
Five9 Inc.
Five9 provides intelligent cloud software for contact centers in the United States, India, and internationally. FIVN offers a virtual contact center cloud platform that delivers a suite of applications, enabling a broad range of contact center-related customer service, sales, and marketing functions.
FIVN’s platform comprises interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights, and AI summaries. It allows management and optimization of customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces.
FIVN has been benefiting from the growing adoption of AI tools in its call center services, with personalized AI agents emerging as a major growth driver. On Feb. 19, Five9 introduced its Intelligent CX Platform powered by Five9 Genius AI on the Google Cloud space. FIVN also released new Five9 AI agents tailor-made for Google Cloud.
Astonishing Short-Term Price Upside for FIVN Shares
Five9 has an expected revenue and earnings growth rate of 9.8% and 5.7%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 1.6% in the last 60 days.
The average short-term price target of brokerage firms represents an increase of 130.4% from the last closing price of $23.07. The brokerage target price is currently in the range of $36 to $67. This indicates a maximum upside of 190.4% and no downside.
Unity Software Inc.
Unity Software provides a platform for creating and operating interactive, real-time 3D content. U’s platform provides a set of software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles and augmented and virtual reality devices.
Unity Software enables content creators and developers, artists, designers, engineers, and architects to create interactive and real-time 2D and 3D content. U offers its solutions directly through its online store, field sales operations, independent distributors, and resellers in the United States and internationally.
Excellent Short-Term Price Upside for U Stock
Five9 has an expected revenue and earnings growth rate of -2% and 31%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 1.6% in the last 60 days.
The average short-term price target of brokerage firms represents an increase of 42.8% from the last closing price of $19.23. The brokerage target price is currently in the range of $15 to $35. This indicates a maximum upside of 82% and a downside of 22%.
Olo Inc.
Olo operates an open SaaS platform for restaurants in the United States. OLO’s platform helps restaurants with digital ordering, delivery and full-stack payment programs, as well as enables brands to collect, analyze, and act on data to drive personalized guest experiences and profitable traffic.
OLO’s solutions include Order, a suite of solutions assisting restaurant brands' on-demand digital commerce operations, enabling a unified digital ordering and delivery experience for guests, and menu and channel management for brands across their fragmented technology stacks; and Pay, a fully integrated payments platform that enables restaurants to enhance operations through unified payment processing management and reporting across digital and on-premise transactions, and advanced fraud prevention.
OLO’s solutions also comprise Engage, a suite of marketing solutions that enables restaurants to aggregate and store guest data from Olo Order, Olo Pay, and other sources; segments it based on guest behavior; and delivers personalized marketing messages to guests that help enhance the restaurant's direct guest relationship and enhance restaurant traffic.
Lucrative Short-Term Price Upside for OLO Shares
Olo has an expected revenue and earnings growth rate of 17.5% and 40.9%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 10.7% in the last 60 days.
The average short-term price target of brokerage firms represents an increase of 45.9% from the last closing price of $6.17. The brokerage target price is currently in the range of $8 to $10. This indicates a maximum upside of 62.1% and no downside.
StoneCo Ltd.
StoneCo provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. STNE distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services, and sells solutions to brick-and-mortar and digital merchants.
Impressive Short-Term Price Upside for STNE Stock
StoneCo has an expected revenue and earnings growth rate of 4.1% and -6.7%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 5.9% in the last seven days.
The average short-term price target of brokerage firms represents an increase of 22.1% from the last closing price of $11.53. The brokerage target price is currently in the range of $6 to $22. This indicates a maximum upside of 90.8% and a downside of 48%.
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