2 Hot IPO Stocks I Just Bought

After languishing in a deep freeze over the past few years, the market for initial public offerings (IPOs) is finally gaining steam. In recent months, several companies have gone public, seizing the opportunity to meet the growing investor demand for newly listed shares.

I've closely watched the pre-IPO market, waiting for the opportunity to buy shares of some compelling companies. I recently invested in two standout companies: ServiceTitan (NASDAQ: TTAN) and Klarna Group (NYSE: KLAR). Here's why I bought these hot IPO stocks.

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A huge market opportunity

ServiceTitan completed its IPO late last year. The company provides cloud-based software to contractors working in the trades industry, including heating and air-conditioning, plumbing, and electrical service providers.

One of the things that drew me to ServiceTitan is the huge opportunity for its software. The trades industry is enormous, with businesses in the U.S. generate an estimated $1.5 trillion in annual revenue. ServiceTitan currently offers software that could serve companies generating about $650 billion in annual revenue.

However, its current collection of customers only produces about $75 billion in revenue. This means the company currently addresses just a small slice of the market, providing ample room for expansion as it brings more businesses onto its platform and extends its services into added trades.

The company currently generates less than $900 million in annual revenue. With a fully deployed platform, it estimates that revenue from existing customers could hit $1.5 billion. Looking ahead, it sees a $13 billion opportunity with its current platform, and more than $30 billion in annual revenue potential as it expands into new trades and markets.

The company is actively capitalizing on this opportunity. Revenue grew 25% in its fiscal second quarter of 2026 to $242 million. Retaining existing customers and expanding those relationships helped drive growth, as evidenced by its net dollar revenue retention of over 110%. It hasn't yet achieved profitability under generally accepted accounting principles (GAAP), but its free cash flow rose over 83% in the period to $34.3 million.

I believe ServiceTitan can continue to grow rapidly for years to come, given its substantial untapped market and expanding customer base. This significant opportunity presents a long path to increasing revenue, which is why I believe it could deliver robust returns in the coming years.

An AI-powered fintech leader

Klarna Group just completed its long-awaited IPO last month. The Swedish financial technology company enables consumers to make buy now, pay later (BNPL) purchases. It also actively leverages artificial intelligence (AI) to boost productivity and enhance its services.

The company is capitalizing on several trends to build a unique commerce network. Consumers are increasingly using digital payments to process transactions.

At the same time, they're shifting away from credit cards and have low trust in banks. That's enabling Klarna to bridge the gap between consumers and merchants with a digital solution for payments and banking built on its proprietary AI-powered technology.

Klarna makes money from payments and advertising, which are huge and growing market opportunities. The current addressable market for its payments offering is $520 billion. It has a tiny sliver of that market (0.6%).

Management estimates that there's over $100 billion of growth ahead in its existing markets and a more than $400 billion expansion opportunity in potential new markets. Meanwhile, the digital advertising market is $570 billion. The company has an even smaller slice of this (0.03%), which it sees growing to $735 billion in the coming years.

The business is growing rapidly and now serves 790,000 merchants (a 34% year-over-year increase in the second quarter) and supports 111 million active customers (a 31% increase). This expanding user base helped drive a 20% boost in revenue to $823 million.

With two huge addressable markets, Klarna appears to have significant long-term potential. The small share of both the payment and digital advertising markets that it currently holds suggests there's plenty of room to deliver rapid revenue growth as it continues to expand into new sectors. This growth potential could enable the company to generate strong returns in the coming years.

Two potential game changers

I believe ServiceTitan and Klarna have tremendous opportunities, and both companies are using their proprietary technology to capitalize on it. I expect that they could deliver game-changing returns, which makes me excited to finally add these recent IPOs to my portfolio.

Matt DiLallo has positions in Klarna Group and ServiceTitan. The Motley Fool has positions in and recommends Klarna Group. The Motley Fool recommends ServiceTitan. The Motley Fool has a disclosure policy.