We recently published a list of 15 Most Promising Technology Stocks to Buy Now. In this article, we are going to take a look at where Itron, Inc. (NASDAQ:ITRI) stands against other most promising technology stocks to buy now.

The global technology sector is on track for strong earnings growth in 2025, driven by advancements in artificial intelligence (AI), cloud computing, and semiconductors. Despite macroeconomic uncertainties, tech companies have demonstrated resilience, leveraging innovation to sustain revenue and profit expansion. Analysts anticipate substantial earnings growth across the sector, reflecting solid fundamentals and continued investment in transformative technologies.

According to a December 2024 report by John Butters, Vice President and Senior Earnings Analyst at FactSet, earnings for the S&P 500 are expected to grow by approximately 15% in 2025, with the information technology (IT) sector playing a crucial role in this expansion. Notably, all eleven sectors of the S&P 500 are projected to see year-over-year earnings growth, with six—including IT—expected to achieve double-digit increases. The report also emphasizes an interesting shift which is occurring outside of the “Magnificent 7,” the group of mega-cap tech companies that have historically driven market performance. While analysts forecast a 21% earnings growth for the Magnificent 7 in 2025, they also predict a significant improvement in earnings for the other 493 companies in the S&P 500, projecting a 13% increase. This represents a considerable jump from the mere 4% earnings growth expected for these same companies in 2024, signaling broader market participation in 2025.

Shifting Investor Focus Beyond Mega-Cap Tech

Although the Magnificent 7 continue to dominate the market, investor sentiment suggests a growing shift toward smaller, high-growth tech firms. Gene Munster, Managing Partner at Deepwater Asset Management, highlighted in a recent CNBC interview that while large-cap tech remains fundamentally strong, smaller companies within the “frontier tech” sector—typically valued below $500 billion—are poised to outperform over the next few years. This shift stems from concerns that trillion-dollar companies may have limited potential for high-percentage gains, prompting investors to explore smaller opportunities in AI, cloud infrastructure, and semiconductor equipment manufacturing.

A report from Deloitte’s 2025 Technology Industry Outlook reinforces the growth trajectory of the sector. Despite economic headwinds, technology investments are expected to accelerate, with increased spending on AI, cybersecurity, and enterprise software. Cybersecurity will be a critical focus as the digital attack surface expands due to the rise of IoT, generative AI, and cloud adoption. The global cost of cybercrime is projected to reach a staggering $10.5 trillion in 2025, emphasizing the need for heightened security investments.

Conclusion

As the technology sector heads into 2025, robust earnings growth is expected to continue, supported by AI-driven innovations and expanding digital transformation initiatives. The massive capital expenditures recently announced by major tech companies reflect confidence in the sector’s long-term potential. However, while mega-cap tech remains a dominant force, investor focus may increasingly shift toward smaller, high-growth companies that are pioneering next-generation technologies.

Our Methodology

To determine the 15 most promising technology stocks, we began by analyzing all U.S.-listed tech companies with a market capitalization of at least $2 billion. To exclude unprofitable companies, we considered only companies that reported a positive net profit margin over the trailing twelve months period. From this refined list, we further narrowed our selection to those stocks with a potential upside of more than 10%. Finally, we ranked the companies in ascending order based on the number of hedge funds holding stakes in the respective company, with the company attracting the most hedge fund interest securing the top spot.

Note: All pricing data is as of market close on February 17.

At Insider Monkey we are obsessed with 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).

Itron, Inc. (NASDAQ:ITRI)

Number of Hedge Funds: 37

Potential Upside: 34%

Itron, Inc. (NASDAQ:ITRI) specializes in energy and water resource management solutions for utilities and cities worldwide. The company offers a comprehensive portfolio of products and services, including smart meters, network communication technologies, and advanced data analytics software. These solutions enable customers to efficiently manage energy and water usage, enhance operational efficiency, and promote sustainability initiatives.

On February 11, Itron, Inc. (NASDAQ:ITRI) announced its collaboration with Publiacqua, the primary water supplier for 1.3 million residents in Tuscany, Italy, to upgrade the region’s water distribution network. This modernization effort leverages Itron’s Ultrasonic Intelis water meters, which feature advanced leak detection capabilities to enhance data accuracy and reliability. Through this initiative, Itron continues to drive the global shift toward smart grids and intelligent urban infrastructure, addressing the increasing need for sustainable resource management and improved operational efficiency.

In its most recent update (November 2024), Roth MKM raised its price target for Itron, Inc. (NASDAQ:ITRI)’s shares from $125 to $130 while maintaining its rating. The analyst cited Itron Inc. (NASDAQ:ITRI)’s strong backlog visibility as a key advantage, particularly as the company stands to benefit from forthcoming infrastructure investments. According to the analyst, these investments serve as favourable market drivers that could fuel growth, even amid potential short-term fluctuations in project timelines. Additionally, its counter-cyclical positioning was highlighted as a strength, offering resilience in the face of economic and political uncertainties. The company’s stability in volatile conditions makes it an appealing investment option. Both TD Cowen and Canaccord Genuity also reaffirmed their Buy ratings on Itron, Inc. (NASDAQ:ITRI) in their respective reports in November.

Overall, ITRI ranks 9th on our list of most promising technology stocks to buy now. While we acknowledge the potential of ITRI to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ITRI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.