Dave Inc. DAVE, V2X Inc. VVX and Coherent Corp. COHR, 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 2.1% in the first quarter of 2026 compared with 0.5% in the fourth quarter of 2025. The growth rate has increased, leading to a velocity with which the economy is moving that 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 24 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 $804.3 billion by 2032, witnessing a 12.6% CAGR from 2026 to 2032.
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 #97. This rank places it in the top 39% of 247 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 But Lags 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 moved up 5.8% over this period against the 16.7% decline of the broader sector and compared with the 25.4% 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 17.73X compared with the S&P 500’s 18.68X and the sector’s 10.18X.
Over the past five years, the industry has traded as high as 28.97X and as low as 10.26X, with the median being 13.93X, as the charts below show.
EV-to-EBITDA
3 Technology Services Poised for Growth
Dave: This financial technology company offers digital banking, budgeting tools and credit facilities like ExtraCash. Dave’s first-quarter 2026 earnings release reveals positive momentum in its revenues that gained 47% year over year, with adjusted EBITDA rising 57%, resulting in a 44% margin.
DAVE’s customer-first strategy bears fruit as the new member count went up 22% year over year in the first quarter of 2026, with customer acquisition costs of $18, flat with the preceding quarter. The company strengthened its relationship with customers as monthly transacting members (MTM) increased 18% year over year, with average revenue per use (ARPU) moving up 24%.
Despite an upsurge in MTM, which could raise credit risks, Dave gracefully managed to mitigate the threat, leveraging its proprietary AI and machine learning-based CashAI v5.5 model. This credit risk management apparatus led to the lowest loss rate on record in first-quarter 2026, lowering the 28-day past-due metric to 1.69%. Dave introduced Dave Flex, a “Pay in 4” credit product, to a small testing group of existing members. The company deduced the following results that include exponential growth in total originations per customer and an anticipated rise in ARPU.
The company remains on track to transition ExtraCash receivables to an off-balance sheet funding structure with Coastal Community Bank, which is expected to unlock $200 million in incremental liquidity, reduce costs of capital and support the repayment of the existing credit facility.
DAVE currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2026 EPS has moved up 14.1% in the past 90 days. Daveshares have surged 114.8% over the past year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
V2X: This company offers critical mission solutions and support services to defense clients globally. VVX reported an outstanding performance in the first quarter of 2026 during its earnings release. The top line gained 23% year over year, with adjusted net income accelerating 53%, leading to bottom-line growth of 55%.
V2X’s total backlog reached a record $13.8 billion, providing strong visibility into long-term revenues, with 94% of the top line in 2026 already visible in the backlog and under contract. Across all businesses, the company held $4.1 billion in total bookings and awards.
The company’s contract execution was impressive, as evidenced by the full operational execution and initial operational capability on the large-scale T-6 aircraft program during the first quarter of 2026. It led management to expect revenues of $175-$180 million from this program. V2X managed to provide a $70-$80-million boost to the mid-point of the top-line guidance on the back of a discrete time-and-materials contract with a national security customer expansion and extension.
V2X is no less on the AI front, launching three internal AI platforms operating on enterprise IT infrastructure. It has resulted in a significant expansion in AI-enabled productivity and operational efficiency in support functions. Partnerships with Google, NVIDIA, Amazon and Tactile assisted the company in building differentiated, AI-backed predictive platforms for aerospace sustainment and client bids.
VVX presently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its 2026 bottom line increased 4.4% in the past 90 days. V2X shares have gained 59.1% in a year.
Coherent: This prominent player in the materials, networking and lasers domain is riding the AI wave. The rapid expansion of AI data centers and the rising demand for bandwidth and energy efficiency are fueling the expansion in optical networking infrastructure. It has led to a step-function increase in its order book, resulting in a record level of backlog.
The upsurge in Coherent’s transceiver demand can be attributed to the rapid adoption of 800-gig and 1.6T transceivers by customers. On the Optical Circuit Switch front, the market opportunity exceeds $4 billion. The company resolved a critical manufacturing bottleneck, enabling output to increase rapidly across two production facilities and convert backlog into top-line growth.
Coherent’s partnership with NVIDIA is instrumental to raising Co-Packaged Optics’ (CPO) addressable market opportunity over $15 billion. The company anticipates initial scaled-out CPO revenues in late 2026, followed by scaled-out CPO revenues in late 2027.
Supply-chain headwinds are prevalent within the AI market. To address this concern, COHR expanded internal Indium Phosphide (InP) capacity. The shift from 3-inch InP to 6-inch yields more than 4X as many devices at less than half the cost. The company’s strategy to sign and finalize long-term agreements with customers, including upfront capital investments from customers, helps fund and mitigate challenges encircling COHR’s capacity expansion.
COHR currently flaunts a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its fiscal 2026 bottom line has increased 1.5% in the past 90 days. Coherent shares have skyrocketed 198.5% in a year.
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Dave Inc. (DAVE): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).