Core Insights - The Technology Services industry has experienced significant growth since the pandemic, driven by remote work adoption and technological advancements such as 5G, blockchain, AI, and ML [1][5][7] Industry Overview - The Zacks Technology Services industry includes companies that produce, develop, and design software support, data processing, computing hardware, and communications equipment [3] - This industry serves both consumer and business markets, offering a wide range of services including advanced analytics, clinical research, data storage technology, and technology-enabled financial services [4] Future Trends - The industry is mature with a healthy demand for services, and revenues are expected to return to pre-pandemic levels, supporting stable dividends for most players [5] - Economic recovery is benefiting the sector, with GDP growth of 3.8% in Q2 2025 and a strong Services PMI indicating robust non-manufacturing sector activity [6] - The global shift towards digitization is creating opportunities in markets like 5G, blockchain, and AI, with the GenAI market projected to reach $59 billion in 2025 and a CAGR of 37.6% from 2025 to 2031 [7] Industry Performance - The Zacks Technology Services industry has outperformed the broader Zacks Business Services sector and the S&P 500, with a 53% increase over the past year compared to a 7.5% decline in the sector and a 17.9% rise in the S&P 500 [10] - The industry is currently trading at an EV-to-EBITDA ratio of 17.19X, lower than the S&P 500's 18.33X, indicating potential valuation opportunities [11] Company Highlights - **Futu Holdings**: A digitalized securities brokerage with a 69.7% year-over-year revenue increase in Q2 2025, and a 1,570 basis points expansion in operating margin. The company added 262,000 funded accounts, totaling 2.7 million [12][13] - **Dave**: A financial services platform that added 843,000 members, resulting in a 60% year-over-year revenue increase. The company raised its full-year revenue guidance to $544-$547 million [15][19] - **Coherent Corp.**: A leader in photonics with a 16.4% year-over-year revenue growth in Q4 2025, driven by demand for 800G transceivers. The company introduced a new 1.6T transceiver, enhancing its market position [20][21]

Industry Overview - The Technology Services industry has experienced significant growth since the pandemic, driven by the rapid adoption of remote work and advancements in technology such as 5G, blockchain, AI, and ML [1] - The industry includes companies that produce, develop, and design software support, data processing, computing hardware, and communications equipment, catering to both consumer and business markets [2] Future Prospects - The demand for services in the industry remains healthy, with revenues and cash flows expected to return to pre-pandemic levels, supporting stable dividends for most players [3] - The sector benefits from broader economic recovery, with GDP growing at an annual rate of 3.8% in Q2 2025 and a Services PMI remaining above 50% for 11 of the past 13 months [4] Technological Advancements - The global shift towards digitization presents opportunities in markets such as 5G, blockchain, and AI, with the GenAI market projected to reach $59 billion by 2025 and a CAGR of 37.6% from 2025 to 2031 [5] Market Performance - The Zacks Technology Services industry ranks 94, placing it in the top 39% of over 243 Zacks industries, indicating strong near-term prospects [6][7] - Over the past year, the industry has outperformed the broader Zacks Business Services sector, increasing by 53% compared to a 7.5% decline in the sector and a 17.9% rise in the S&P 500 [8] Current Valuation - The industry is currently trading at an EV-to-EBITDA ratio of 17.19X, compared to the S&P 500's 18.33X and the sector's 10.49X, with a five-year trading range of 8.85X to 17.19X [11] Company Highlights Futu Holdings - Futu Holdings, a digital securities brokerage, reported a 69.7% year-over-year revenue increase in Q2 2025, with a significant operating margin expansion [16] - The company added 262,000 funded accounts, reaching a total of 2.7 million, with a 42% year-over-year growth in funded accounts [17] - Futu Holdings has a Zacks Rank 1 (Strong Buy), with earnings expected to grow 74.7% year-over-year in 2025 [18] Dave - Dave, a financial services platform, added 843,000 members, resulting in a 60% year-over-year revenue increase in Q3 2025 [19] - The company raised its full-year revenue guidance to $544-$547 million, up from $505-$515 million [21] - Dave holds a Zacks Rank 1, with earnings expected to soar 98.5% year-over-year in 2025 [22] Coherent Corp. - Coherent Corp. experienced a 16.4% year-over-year revenue growth in Q4 2025, driven by demand for 800G transceivers [23] - The company introduced a new 1.6T transceiver, contributing to improved profitability with a non-GAAP gross margin increase of 290 basis points [24] - Coherent has a Zacks Rank 2 (Buy), with earnings expected to rise 30% year-over-year in fiscal 2026 [25]

Core Insights - Both Futu Holdings Limited (FUTU) and Nu Holdings (NU) are significant players in the fintech sector, with FUTU focusing on digital brokerage in Hong Kong and internationally, while NU serves the Latin American market with banking and financial services [1] Futu Holdings (FUTU) - FUTU achieved a remarkable 69.7% year-over-year revenue growth in Q2 2025, driven by its integration of AI into operations [2] - The company expanded its client base by adding 262,000 funded accounts in Q2 2025, totaling 2.7 million, reflecting a 42% year-over-year increase [3] - Total assets under management for FUTU surged 104.4% year-over-year as of Q2 2025, supported by partnerships with over 80 fund companies [4] - FUTU's strategy includes leveraging AI in its products, with offerings like Futubull AI and moomoo AI enhancing its global reach [6] Nu Holdings (NU) - NU added over 4.1 million customers in Q2 2025, bringing the total to 122.7 million, which represents a 17% year-over-year growth [7] - The company reported $3.7 billion in revenue for Q2 2025, a 29% increase year-over-year, with average revenue per active customer rising 18% to $12 [8] - NU's digital-first model, particularly through its NuBank, has disrupted traditional banking in Brazil and is expanding into Colombia and Mexico [9] - The company demonstrated effective risk management, with a 30-basis point decline in the 15-90-day non-performing loan ratio, indicating improved asset quality [11] Financial Estimates - The Zacks Consensus Estimate for FUTU indicates a 42.9% growth in sales and a 66.9% increase in EPS for 2025 [12] - For NU, the estimates suggest a 32.2% growth in sales and a 24.4% increase in EPS for 2025 [13] Valuation Comparison - NU is trading at a forward price-to-sales multiple of 4.13, lower than its 12-month median of 3.65, while FUTU's forward earnings multiple is 9.82, above its median of 7.24 [15] Conclusion - Both FUTU and NU are strong contenders in the fintech space, but NU is positioned as a more attractive investment due to its rapid customer base expansion and efficient business model [18] - Despite both companies being fundamentally strong, NU's lower valuation compared to FUTU suggests it may offer better long-term returns for investors [19]

Core Insights - Futu Holdings Limited (FUTU) has integrated AI into its Moomoo and Futubull platforms to enhance client acquisition and improve offerings for retail and high-net-worth (HNW) investors [1] Group 1: AI Integration and Client Growth - The launch of Futubull AI in March 2025 led to approximately 2 million user queries processed by the end of the quarter, with a 3X increase in adoption from Q1 2025 [2] - AI-driven products provide real-time insights, improving market research and enhancing customer experience, making FUTU a preferred choice for retail investors [3] - HNW clients in Singapore experienced a 40% quarter-over-quarter increase in net inflows, indicating the effectiveness of AI products [4] Group 2: Financial Performance - As of Q2 2025, FUTU reported a 40% year-over-year growth in funded accounts and a 68% increase in total clients, with a quarterly retention rate above 98% [5] - The company's top line surged 69.7% year-over-year in the June quarter, driven by brokerage commissions and subscription services supported by AI insights [5] - Net income increased by 105% year-over-year, with margins expanding by 980 basis points, showcasing the impact of AI on profitability [6] Group 3: Market Performance and Valuation - FUTU's stock price increased by 130% over the past six months, outperforming competitors and the industry, which saw increases of 94.8% and 31.3%, respectively [7] - The company trades at a forward price-to-earnings ratio of 19.06, lower than the industry average of 31.02, and significantly lower than Agora and Skillsoft [11] - The Zacks Consensus Estimate for FUTU's earnings for 2025 and 2026 has risen by 10.7% and 9.9%, respectively, over the past 60 days [14]

Core Insights - Both OppFi Inc. (OPFI) and Futu Holdings Limited (FUTU) are significant players in the fintech sector, with OPFI focusing on credit access for the underbanked and FUTU providing online brokerage and wealth management services [1] Summary of OppFi - OPFI targets the underbanked demographic, addressing their challenges in accessing credit from traditional banks [2] - In Q2 2025, OPFI reported a 12.8% year-over-year growth in revenue and a 13.8% increase in total net originations, driven by a customer-first and dynamic pricing strategy [3] - The company’s AI and machine learning-based Model 6 improved the loan auto approval rate to 80% from 76% year-over-year, enhancing service quality [3] - OPFI's credit quality strategy led to high customer satisfaction scores, with a net promoter score of 79 and a customer satisfaction score of 89% [4] - The company raised its 2025 revenue guidance to $578-$605 million and adjusted net income guidance to $125-$130 million [5] - Estimates indicate a 49.5% growth in EPS for OPFI in 2025 [9] Summary of Futu Holdings - FUTU operates as a fully digital platform with low fees, competing against traditional brokerage services [6] - In Q2 2025, FUTU experienced a 69.7% year-over-year revenue increase and a 1570-basis-point rise in operating margin [6] - Growth factors included increased funded accounts, robust trading volumes, and a 98% client retention rate [7] - AI plays a crucial role in FUTU's strategy, with tools like Futubull AI and moomoo AI enhancing global reach and investment offerings [8] - Total assets under management surged by 104.4% year-over-year as of Q2 [9] - Estimates suggest a 64.5% growth in EPS for FUTU in 2025 [13] Comparative Analysis - OPFI trades at a forward earnings multiple of 7.95, lower than its median of 8.55, while FUTU trades at 18.81, above its median of 15.87 [14] - OPFI is considered a smarter buy due to its focus on the underbanked market and competitive edge in credit access [16] - Despite both companies being fundamentally strong, OPFI's discounted valuation presents a more attractive opportunity for growth-focused investors [17]

Core Insights - Futu Holdings Limited (FUTU) shares have increased by 221.8% over the past year, significantly outperforming its industry and the Zacks S&P 500 Composite [1] - The company has also shown strong year-to-date performance with a 135.1% increase, compared to Mogo's 30.1% rise and Vimeo's 24.9% decline [4] Group 1: International Expansion and Client Engagement - In Q2 2025, over 50% of funded accounts came from clients outside of Futu Securities Hong Kong, with the U.S. and Singapore being the largest markets [5] - The company experienced a 32% year-over-year growth in new funded accounts, driven by successful international expansion strategies [6][10] - Client assets surged by 68.1% year-over-year, with a retention rate above 98%, indicating strong client loyalty [7][10] Group 2: Product and Service Innovation - Futu Holdings is focused on providing a comprehensive trading platform, offering diverse products such as IPO financing, crypto-trading, and structured products [8] - The launch of Futubull AI in Hong Kong and moomoo AI internationally has enhanced the company's product offerings, providing smart investment tools for global investors [9] Group 3: Financial Performance and Valuation - Futu Holdings' stock is currently undervalued, trading at 21.17 times forward 12-month earnings, compared to the industry average of 28.13 times [11] - The company's return on equity (ROE) stands at 26.4%, significantly higher than the industry average of 6.7%, and return on invested capital (ROIC) is at 15.6%, exceeding the industry average of 3.6% [13] - The Zacks Consensus Estimate for FUTU's 2025 sales is $2.4 billion, reflecting a 38.2% year-over-year increase, with earnings expected to rise by 64.5% [16][17] Group 4: Investment Recommendation - The combination of international expansion, innovative products, strong profitability, and liquidity positions Futu Holdings as a fundamentally strong stock [18] - Analysts have shown optimism with upward revisions in earnings estimates, reinforcing the recommendation to buy the stock for long-term returns [19]

Market Overview - The stock market is expected to remain volatile due to high stock prices relative to historical averages and uncertainties surrounding interest rate cuts and tariffs [1] - The Federal Reserve is uncertain about the impact of tariffs on inflation, which may affect the timing and magnitude of potential rate cuts [1] Investment Opportunities - Stocks such as Vipshop Holdings Limited (VIPS), Stride Inc. (LRN), HSBC (HSBC), and Futu Holdings Limited (FUTU) are highlighted as potential investment opportunities due to their growth strategies and resilience in uncertain market conditions [2][9] Stock Characteristics - Beta is used to measure the volatility of a stock compared to the market, with a beta of 1 indicating movement in line with the market, greater than 1 indicating higher volatility, and less than 1 indicating lower volatility [3][4] - A screening criterion for selecting stocks includes a beta between 0 and 0.6, ensuring lower volatility than the market, along with positive price movement over the last month, substantial trading volume, and a price of at least $5 [5][6] Company Insights - **Vipshop Holdings**: Utilizes a unique strategy called "Made for Vipshop," offering exclusive products from over 200 brands, which drives customer loyalty [7] - **Stride Inc.**: Focuses on innovative educational solutions and is well-positioned for long-term success due to increasing demand for school choice and tutoring services [10] - **HSBC**: Investing in growth areas by opening new wealth management centers in key locations and simplifying processes for small and medium-sized enterprises [11] - **Futu Holdings**: A tech-driven company enhancing online investing experiences with upgrades like the Futubull AI, which provides quick and accurate investment-related assistance [12]

Core Insights - The U.S. stock market is anticipated to remain volatile due to stalled trade talks with China and uncertainty surrounding the Federal Reserve's interest rate decision, prompting a focus on low-beta stocks as a strategic investment approach [1][2] Group 1: Market Conditions - The U.S. stock market is expected to experience volatility as trade discussions with China have stalled, leading to investor uncertainty [1] - Investors are apprehensive ahead of the Federal Reserve's interest rate decision, which may negatively affect borrowing costs and business growth [1] Group 2: Investment Strategy - Creating a curated portfolio of low-beta stocks is recommended as a prudent strategy to navigate market volatility [1][2] - Stocks such as Vipshop Holdings Limited (VIPS), GDS Holdings Limited (GDS), Futu Holdings Limited (FUTU), and Verona Pharma plc (VRNA) are highlighted as potential investment opportunities [2][9] Group 3: Stock Characteristics - Beta measures the volatility of a stock relative to the market, with a beta of less than 1 indicating lower volatility compared to the market [3][4] - A screening criterion for low-beta stocks includes a beta between 0 and 0.6, ensuring less volatility [5][6] Group 4: Company Highlights - **Vipshop Holdings**: Utilizes a strategy called "Made for Vipshop," offering exclusive products from over 200 brands, which are in high demand [7] - **GDS Holdings**: Recently secured a 152 MW AI data center order and plans to expand its 900 MW capacity in key markets, indicating strong demand [9][10] - **Futu Holdings**: A tech-driven company enhancing its platform with Futubull AI, a smart assistant for investment-related queries [11] - **Verona Pharma**: Its drug Ohtuvayre is a novel COPD treatment, combining bronchodilation and anti-inflammatory effects, marking a significant advancement in therapy [12]

Core Insights - The U.S. stock market is anticipated to remain volatile due to rising inflation pressures from new tariffs and uncertainty surrounding corporate earnings [2] - A curated portfolio of low-beta stocks is recommended as a strategy to navigate this volatility [2][3] Stock Analysis - **Vipshop Holdings Limited (VIPS)**: The company utilizes the "Made for Vipshop" program, offering exclusive products from over 200 brands, which drives customer loyalty and demand [8][10] - **Alkami Technology Inc (ALKT)**: The firm is experiencing increased demand from banks and credit unions, particularly due to its acquisition of MANTL, which simplifies account opening processes [11][10] - **Futu Holdings Limited (FUTU)**: As a tech-driven company, Futu is enhancing its online investment platform, recently introducing Futubull AI, a smart assistant for investment inquiries [12][10] - **Verona Pharma plc (VRNA)**: The company's drug Ohtuvayre is a significant advancement in COPD treatment, being the first inhaled therapy with a new mechanism in over two decades, providing dual benefits of bronchodilation and anti-inflammatory effects [13][10] Screening Criteria - Stocks with a beta between 0 and 0.6 are prioritized for lower volatility compared to the market [6] - Additional criteria include positive price movement over the last month, average trading volume greater than 50,000, a minimum price of $5, and a Zacks Rank of 1 indicating strong buy potential [7]

Core Insights - Futu Holdings Limited reported strong financial results for Q1 2025, with significant growth in funded accounts, client assets, and trading volume, indicating robust market performance and effective marketing strategies [3][4][6]. Operational Highlights - The company added approximately 262 thousand funded accounts in Q1 2025, a 47.8% increase year-over-year and 21.9% quarter-over-quarter, bringing total funded accounts to 2.7 million, up 41.6% year-over-year [3][4]. - Total client assets reached HK$829.8 billion, reflecting a 60.2% year-over-year increase and an 11.6% quarter-over-quarter increase [4][5]. - Total trading volume for Q1 2025 was HK$3.22 trillion, a 140.1% increase year-over-year, with U.S. stock trading volume at HK$2.25 trillion and Hong Kong stock trading volume at HK$916.0 billion [4][6]. Financial Highlights - Total revenues for Q1 2025 were HK$4,694.6 million (US$603.4 million), an 81.1% increase from HK$2,592.5 million in Q1 2024 [6][7]. - Net income increased by 107.0% year-over-year to HK$2,142.7 million (US$275.4 million), with a net income margin of 45.6% [14][16]. - Non-GAAP adjusted net income rose by 97.7% year-over-year to HK$2,216.9 million (US$285.0 million) [15][39]. Cost and Profit Analysis - Total costs increased by 59.3% year-over-year to HK$749.0 million (US$96.3 million) [8][9]. - Total gross profit was HK$3,945.7 million (US$507.2 million), an 85.9% increase from HK$2,122.2 million in Q1 2024, with a gross margin of 84.0% [10][13]. - Operating expenses rose by 35.6% year-over-year to HK$1,260.4 million (US$162.0 million) [11][12]. Wealth Management and IPO Activities - Wealth management client assets were HK$139.2 billion, up 117.7% year-over-year, with 29% of funded accounts holding wealth management products [5]. - The company served as joint lead manager for several high-profile Hong Kong IPOs, achieving significant subscription amounts and client engagement [5].