The Technology Services space has witnessed substantial growth since the pandemic, fueled by the swift adoption of remote work, accelerating the global digital transition. Technological advancements like 5G, blockchain, artificial intelligence (AI) and machine learning (ML) have propelled industry expansion. Also, increased concerns about data security have acted as a stimulus for the industry’s growth.

Futu Holdings (FUTU Quick QuoteFUTU - Free Report) , Coherent Corp. (COHR Quick QuoteCOHR - Free Report) and Enpro Inc. (NPO Quick QuoteNPO - Free Report) are poised to benefit 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, income and cash flows are anticipated to gradually reach the pre-pandemic levels, aiding most industry players to pay out stable dividends.

Economic Recovery: The sector is a major beneficiary of the broader economy and service activities. According to the Bureau of Economic Analysis, GDP grew at an annual rate of 3% in the second quarter of 2025 after a slight decline in the first quarter of 2025. 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 in 12 out of 13 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 $66.9 billion in 2025 and grow, seeing a CAGR of 37% from 2025 to 2031.

Zacks Industry Rank Indicates Bright Near-Term Prospects

The Zacks Technology Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #91. This rank places it in the top 37% of more than 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 and the Zacks S&P 500 composite over the past year.

The industry has surged 72.5% over this period, surpassing the 10.3% rise of the broader sector and the 19.3% 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 33.21X compared with the S&P 500’s 17.07X and the sector’s 11.07X.

Over the past five years, the industry has traded as high as 41.91X and as low as 21.92X, with the median being 30.77X, as the charts below show.

EV-to-EBITDA

3 Technology Services Stocks to Bet On

Futu Holdings: This company is a digitalized securities brokerage and wealth management product distribution service provider operating across Hong Kong and globally.

FUTU primarily focuses on utilizing AI to improve user experience and developing product offerings to meet the dynamic client needs. The company has introduced Futubull AI, a smart investment assistant that leverages FUTU’s financial data and community insights. A satisfaction rate of 90% shows that it is highly accurate. Moving on, we are bullish on the company’s crypto deposit and paper trading functions, which can provide the company with more monetization opportunities.

Financially, FUTU witnessed significant growth, with clients increasing 48% year over year, and new funded accounts growing 48% in the first quarter of 2025. Strong momentum in Hong Kong and rising new funded accounts in Japan and Malaysia drove this growth. Furthermore, total client assets surged 60% year over year due to record net asset inflows. Wealth management plan assets and trading volumes exploded 118% and 140% year over year, respectively.

FUTU currently flaunts a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its 2025 bottom line has increased 16.1% in the past 60 days. Earnings are expected to grow 55.7% year over year in 2025. FUTU shares have skyrocketed 166.8% in the past year.

You can see the complete list of today’s Zacks #1 Rank stocks here. 

Coherent: This global leader in photonics is banking on the AI and data center boom, with COHR at the forefront of optical components and modules aiding the AI-led infrastructure. Strong demand for 800G transceivers and swift development of 1.6T transceivers are expected to fuel growth in the long run. Continued strength in Coherent’s lasers and optics is vital for advanced lithography and inspection.

COHR’s growth has been impressive, with the top line increasing 24% year over year in the third quarter of fiscal 2025, driven by strong demand for AI-related data centers. The company has a strong liquidity position with a current ratio of 2.47 in the third quarter of fiscal 2025, significantly higher than the industry’s 1.22. It indicates that the company can easily pay off short-term obligations.

COHR presently sports a Zacks Rank #1. The Zacks Consensus Estimate for its fiscal 2025 bottom line has increased marginally in the past 60 days. Earnings are expected to rise 111.4% year over year in fiscal 2025. COHR shares have surged 83.6% in the past year.

Enpro: It is a U.S.-based industrial technology company that designs and manufactures products and materials for tech-intensive sectors.

Strength across aerospace, food and pharma markets, and strategic pricing initiatives are driving the company’s growth. Expansion into new markets such as sustainable power generation, including nuclear and compositional analysis, is exceeding the growth expectations of the company. NPO’s improved outlook is facilitated by customer wins in the original equipment manufacturer commercial truck and swiftly growing space market.

The Advanced Surface Technologies (AST) segment improved more than 14% in the second quarter of 2025, driven by leading-edge precision cleaning solutions, optical coatings, and enhanced demand for in-chamber semiconductor tools and assemblies. With the semiconductor market expected to grow, seeing a CAGR of 7.5% from 2025 to 2034, we can expect the AST segment to generate higher revenues in the future.

NPO currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for 2025 EPS has increased 16.1% in the past 60 days. Earnings are expected to rise 55.7% year over year in 2025. NPOshares have gained 42.5% over the past year.