The stock market has yet to recover from the coronavirus pandemic, but a new generation of technology stocks has already broken out.
Software companies like Twilio (TWLO), Okta (OKTA) and Datadog (DDOG) hit new record highs last month. Service providers like Zoom Video Communications (ZM), Shopify (SHOP), Docusign (DOCU) and Wix (WIX) also made the list.
Many of the new names were already growing before coronavirus. Now they’re benefiting further as the pandemic drives remote work and e-commerce. Most the companies are also relatively small in market capitalization, which may spur hopes of potential takeovers down the road.
TWLO is one of the biggest gainers, almost quadrupling from its mid-March low. The cloud-based messaging firm is a poster child of the new era, letting developers easily build communications into services. Earnings and guidance crushed estimates a month ago as users proliferated across the economy. Analysts who once doubted its business model have scrambled to turn bullish.
Zscaler’s (ZS) cloud-based secure web gateways keep employees from accessing malicious web content. While ZS didn’t invent the service, it’s uniquely designed for broader cloud-based environments. The shares are up more than 300 percent from their March 12 low.
Enterprise in Focus
So-called “FANG” stocks have been one of the biggest trends in recent years. These companies like Facebook (FB) and Netflix (NFLX) are not only big and famous. They’re also well known on Main Street because they mostly serve consumer end markets.
The new breed of tech stocks, on the other hand, generally focus on businesses and enterprises. The fact they’ve broken out to new highs could also make them appear more bullish than larger names like Microsoft (MSFT) or Salesforce.com (CRM).
Take Datadog (DDOG) for example. Its monitoring and analytics platform renders sophisticated dashboards for IT teams. The 10-year old company thrashed estimates last quarter and is up more than 200 percent from its March 16 low.
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Several of the stocks highlighted in this article are members of two new exchange-traded funds (ETFs) dedicated to cloud computing: Global X Cloud (CLOU) and WisdomTree Cloud Computing (WCLD). Both closed at new record highs yesterday.
Below is a fuller list of new technology companies that have broken out.
| Company | Market Cap | Change from Low | Revenue Growth |
| ZScaler (ZS) | $13 bln | +314% | +40% |
| Zoom Video (ZM) | $51 bln | +312% | N/A |
| Twilio (TWLO) | $28 bln | +292% | +57% |
| Wix (WIX) | $12 bln | +288% | +24% |
| Datadog (DDOG) | $21 bln | +241% | +50% |
| Coupa Software (COUP) | $15 bln | +236% | +49% |
| Okta (OKTA) | $24 bln | +231% | +46% |
| DocuSign (DOCU) | $26 bln | +227% | +38% |
| Ringcentral (RNG) | $24 bln | +207% | +33% |
| Fortinet (FTNT) | $22 bln | +206% | +22% |
