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3 Technology Services Stocks to Consider Despite Industry Challenges
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The Technology Services industry is expected to reach the pre-pandemic levels eventually, enabling regular dividend payments. The rising adoption of remote work, swift global digital transition and technological advancements like 5G, blockchain, artificial intelligence (AI) and machine learning (ML) will propel industry expansion. Also, raising concerns about data security will provide an impetus for the industry to grow.
The Zacks Technology Services industry encompasses companies involved in producing, developing and designing various software support, data processing, computing hardware and communications equipment. These offerings range from integrated powertrain technologies, advanced analytics, technology solutions and contract research services to semiconductor packaging and interconnect technologies, collaboration software, specialty printers, and data acquisition and analysis systems. This industry caters to consumer and business markets and serves diverse end markets and customer segments. Additionally, some industry players offer advanced analytics, clinical research services, data storage technology and solutions, and technology-enabled financial services for consumers and small business owners.
Factors Structuring the Future of Technology Services
Rising Demand Environment: The industry is mature, with the demand for services remaining healthy over time. Revenues and cash flows are expected to eventually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends.
Economic Recovery: According to the Bureau of Economic Analysis, GDP rose at an annual rate of 0.5% in the fourth quarter of 2025, compared with 4.4% reported in the third quarter of 2025. While the growth rate has slowed down, the velocity with which the economy is moving is still forward. Economic activities in the non-manufacturing sector are in good shape. The Services PMI measured by the Institute for Supply Management has stayed above the 50% mark for 21 months.
Technological Advancement Takes Center Stage: The global shift toward digitization creates opportunities in various markets, including 5G, blockchain and AI. The United States, a significant player in the IT sector, is positioned for growth on the widespread adoption of smart technologies and increased investments in security. Companies are increasingly adopting generative AI, ML, blockchain and data science to gain a competitive advantage. Per Statista, the GenAI market is anticipated to reach $86.7 billion in 2026 and see a CAGR of 24.8% from through 2032.
Zacks Industry Rank Indicates Sluggish Near-Term Prospects
The Zacks Technology Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #172. This rank places it in the bottom 30% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
Industry Beats Sector & S&P 500
The Zacks Technology Services industry has outperformed the broader Zacks Business Services sector but underperformed the Zacks S&P 500 composite over the past year.
The industry has returned 39% over this period against the 13.2% decline of the broader sector and compared with the 37.2% rally of the Zacks S&P 500 composite.
1-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 17.32X compared with the S&P 500’s 18.45X and the sector’s 9.98X.
Over the past five years, the industry has traded as high as 19.82X and as low as 11.94X, with the median being 16.67X, as the charts below show.
EV-to-EBITDA
3 Technology Services Poised for Growth
Dave: This company offers multiple financial products and services via its financial platforms across the U.S. Dave ended 2025 with revenues surging 50% to $554 million and adjusted EBITDA margin hitting 41%. With adjusted EBITDA climbing 162%, it is certain that the company’s business model demonstrates significant operational prowess.
The company witnessed a substantial growth in its member engagement, with multi-transaction members gaining 19% year over year, positioning the company for growth in 2026. ExtraCash originations hit a record $2.2 billion, gaining 50% year over year. Furthermore, Dave recorded a 92% year over year growth in its subscription revenues, aided by its new $3 monthly fee model for new members.
Dave enjoys a technological moat banking on its CashAI v5.5, which has improved its credit performance as evidenced by a 12% sequential improvement in its 28-day past due rate. Therefore, the company can easily manage heightened transactions without a decline in credit quality.
The company maintains a strong liquidity position with a current ratio of 3.83, significantly above the industry’s 1.21. The company holds cash amounting to $121 million, substantially above the current debt of $75 million. Furthermore, with no long-term debt and a times interest earned of 24.9X, the company carries a strong solvency profile.
DAVE currently flaunts a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its 2026 bottom line has increased marginally in the past 30 days. Dave shares have surged 213.4% in a year.
GDS Holdings: This company develops and operates data centers in China. GDS ended 2025 with a 11% growth in its revenues and adjusted EBITDA. The company attained a massive feat of achieving a positive free cash flow supported by asset monetization and enhanced collections.
During the fourth quarter of 2025 earnings call, the CEO, William Huang, stated that China is experiencing increasing availability of domestic high-performance chips, signaling strong AI expansion. GDS witnessed new bookings in 2025 to reach over 96,000 square meters, which is thrice the level in the past three years.
For 2026, GDS Holdings expects over 500MV of gross new bookings, out of which its secured 200MW in orders and 500MW in memorandum of understandings. Management reported a hike in domestic chip supply, boosting confidence to invest in large-scale projects.
As of Dec. 31, 2025, the company holds cash amounting to $2 billion, significantly higher than its short-term debt of $521.8 million. It hints at a strong liquidity position, which is further confirmed by a current ratio of 2.6, increasing from 1.28 reported in the year-ago quarter. A strong liquidity position signals ease in securing the investment required to fund its long-term endeavors.
GDS currently sports a Zacks Rank #1. The Zacks Consensus Estimate for 2026 EPS has remained flat at $1.16 in the past 30 days. GDS shares have moved up 87% in a year.
Price and Consensus: GDS
GigaCloud Technology Inc: The company offers end-to-end B2B ecommerce solutions for large parcel merchandise in the U.S. and globally. GCT integrated Noble House successfully, transforming it from an entity losing nearly $40 million annually into a profitable portfolio that witnessed a 40% year over year growth during the fourth quarter of 2025.
The company completed the acquisition of New Classic Home Furnishing, strengthening its foothold in brick-and-mortar distribution and expanding its product offerings. GCT’s growth was primarily driven by its European business, delivering 68% year over year revenues growth in 2025. To support this growth, the company expanded its infrastructure to 7 facilities.
The 3P seller base widened 17% year over year to 1,299 sellers, with gross merchandise volume from this segment rising 23% to $851 million. There was an addition of nearly 2,800 net new buyers in 2025, reaching the total base of 12,089.
GCT holds a strong balance sheet position with a cash chest amounting to $417 million against a zero current debt. It signals a strong liquidity position, which is further substantiated by the fact that the company holds a current ratio of 2.02, higher than the industry’s 1.21.
GCT presently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its 2026 bottom line has remained flat at $4.1 in the past 30 days. Its shares have gained 87% in a year.
Price and Consensus: GCT
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3 Technology Services Stocks to Consider Despite Industry Challenges
The Technology Services industry is expected to reach the pre-pandemic levels eventually, enabling regular dividend payments. The rising adoption of remote work, swift global digital transition and technological advancements like 5G, blockchain, artificial intelligence (AI) and machine learning (ML) will propel industry expansion. Also, raising concerns about data security will provide an impetus for the industry to grow.
Dave Inc. (DAVE - Free Report) , GigaCloud Technology Inc. (GCT - Free Report) and GDS Holdings Limited (GDS - Free Report) are poised to gain from the prevailing trends.
About the Industry
The Zacks Technology Services industry encompasses companies involved in producing, developing and designing various software support, data processing, computing hardware and communications equipment. These offerings range from integrated powertrain technologies, advanced analytics, technology solutions and contract research services to semiconductor packaging and interconnect technologies, collaboration software, specialty printers, and data acquisition and analysis systems. This industry caters to consumer and business markets and serves diverse end markets and customer segments. Additionally, some industry players offer advanced analytics, clinical research services, data storage technology and solutions, and technology-enabled financial services for consumers and small business owners.
Factors Structuring the Future of Technology Services
Rising Demand Environment: The industry is mature, with the demand for services remaining healthy over time. Revenues and cash flows are expected to eventually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends.
Economic Recovery: According to the Bureau of Economic Analysis, GDP rose at an annual rate of 0.5% in the fourth quarter of 2025, compared with 4.4% reported in the third quarter of 2025. While the growth rate has slowed down, the velocity with which the economy is moving is still forward. Economic activities in the non-manufacturing sector are in good shape. The Services PMI measured by the Institute for Supply Management has stayed above the 50% mark for 21 months.
Technological Advancement Takes Center Stage: The global shift toward digitization creates opportunities in various markets, including 5G, blockchain and AI. The United States, a significant player in the IT sector, is positioned for growth on the widespread adoption of smart technologies and increased investments in security. Companies are increasingly adopting generative AI, ML, blockchain and data science to gain a competitive advantage. Per Statista, the GenAI market is anticipated to reach $86.7 billion in 2026 and see a CAGR of 24.8% from through 2032.
Zacks Industry Rank Indicates Sluggish Near-Term Prospects
The Zacks Technology Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #172. This rank places it in the bottom 30% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
Industry Beats Sector & S&P 500
The Zacks Technology Services industry has outperformed the broader Zacks Business Services sector but underperformed the Zacks S&P 500 composite over the past year.
The industry has returned 39% over this period against the 13.2% decline of the broader sector and compared with the 37.2% rally of the Zacks S&P 500 composite.
1-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing staffing stocks because of their high debt levels, the industry is currently trading at 17.32X compared with the S&P 500’s 18.45X and the sector’s 9.98X.
Over the past five years, the industry has traded as high as 19.82X and as low as 11.94X, with the median being 16.67X, as the charts below show.
EV-to-EBITDA
3 Technology Services Poised for Growth
Dave: This company offers multiple financial products and services via its financial platforms across the U.S. Dave ended 2025 with revenues surging 50% to $554 million and adjusted EBITDA margin hitting 41%. With adjusted EBITDA climbing 162%, it is certain that the company’s business model demonstrates significant operational prowess.
The company witnessed a substantial growth in its member engagement, with multi-transaction members gaining 19% year over year, positioning the company for growth in 2026. ExtraCash originations hit a record $2.2 billion, gaining 50% year over year. Furthermore, Dave recorded a 92% year over year growth in its subscription revenues, aided by its new $3 monthly fee model for new members.
Dave enjoys a technological moat banking on its CashAI v5.5, which has improved its credit performance as evidenced by a 12% sequential improvement in its 28-day past due rate. Therefore, the company can easily manage heightened transactions without a decline in credit quality.
The company maintains a strong liquidity position with a current ratio of 3.83, significantly above the industry’s 1.21. The company holds cash amounting to $121 million, substantially above the current debt of $75 million. Furthermore, with no long-term debt and a times interest earned of 24.9X, the company carries a strong solvency profile.
DAVE currently flaunts a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its 2026 bottom line has increased marginally in the past 30 days. Dave shares have surged 213.4% in a year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: DAVE
GDS Holdings: This company develops and operates data centers in China. GDS ended 2025 with a 11% growth in its revenues and adjusted EBITDA. The company attained a massive feat of achieving a positive free cash flow supported by asset monetization and enhanced collections.
During the fourth quarter of 2025 earnings call, the CEO, William Huang, stated that China is experiencing increasing availability of domestic high-performance chips, signaling strong AI expansion. GDS witnessed new bookings in 2025 to reach over 96,000 square meters, which is thrice the level in the past three years.
For 2026, GDS Holdings expects over 500MV of gross new bookings, out of which its secured 200MW in orders and 500MW in memorandum of understandings. Management reported a hike in domestic chip supply, boosting confidence to invest in large-scale projects.
As of Dec. 31, 2025, the company holds cash amounting to $2 billion, significantly higher than its short-term debt of $521.8 million. It hints at a strong liquidity position, which is further confirmed by a current ratio of 2.6, increasing from 1.28 reported in the year-ago quarter. A strong liquidity position signals ease in securing the investment required to fund its long-term endeavors.
GDS currently sports a Zacks Rank #1. The Zacks Consensus Estimate for 2026 EPS has remained flat at $1.16 in the past 30 days. GDS shares have moved up 87% in a year.
Price and Consensus: GDS
GigaCloud Technology Inc: The company offers end-to-end B2B ecommerce solutions for large parcel merchandise in the U.S. and globally. GCT integrated Noble House successfully, transforming it from an entity losing nearly $40 million annually into a profitable portfolio that witnessed a 40% year over year growth during the fourth quarter of 2025.
The company completed the acquisition of New Classic Home Furnishing, strengthening its foothold in brick-and-mortar distribution and expanding its product offerings. GCT’s growth was primarily driven by its European business, delivering 68% year over year revenues growth in 2025. To support this growth, the company expanded its infrastructure to 7 facilities.
The 3P seller base widened 17% year over year to 1,299 sellers, with gross merchandise volume from this segment rising 23% to $851 million. There was an addition of nearly 2,800 net new buyers in 2025, reaching the total base of 12,089.
GCT holds a strong balance sheet position with a cash chest amounting to $417 million against a zero current debt. It signals a strong liquidity position, which is further substantiated by the fact that the company holds a current ratio of 2.02, higher than the industry’s 1.21.
GCT presently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its 2026 bottom line has remained flat at $4.1 in the past 30 days. Its shares have gained 87% in a year.
Price and Consensus: GCT