Technology investors should consider getting exposure to software stocks. They may be expensive but they have the highest operating margins. There are three hot software stocks to watch.
Snowflake (NYSE:SNOW) posted Q2 revenue of $272.2 million on Aug. 25. This is up 104.4% Y/Y. It lost 64 cents a share and also issued a soft outlook. In Q3, Snowflake expects product revenue in the range of $280 million to $285 million. By 2022, revenue will be as high as $1.07 billion.
SNOW stock is not without risk. RPO growth slowed from 240% in Q3/20 to 122% in Q2/2021. Still, it has a big addressable market.
Data analytics firm Elastic (NYSE:ESTC) posted a strong 49.8% Y/Y growth in revenue to $193.1 million. It now has over 16,000 subscribers in total. CEO Shay Banon expects the product refresh to help customers. The CEO said, "our release of Elastic Limitless XDR is a significant milestone in our efforts to bring actionable security to every organization, powered by our unified search platform."
Palantir (NYSE:PLTR) is the most widely followed software stock. The stock is stuck in a trading range but has upside for the patient investor. Palantir closed 62 deals worth $1 million or more in Q2. It expects Q3 sales of $385 million, up from $375.64 million in Q2.
Palantir has no debt and $2.2 billion in cash on hand. Customer wins will drive its revenue growth.
