• Expert recommends long-term exposure to tech stocks
• Tech trends will play an even greater role for companies in the future
• Security through automation: intelligent cyber defence
Against the background of an impending global recession, high inflation rates and a tight interest rate policy by the Fed and other central banks, the markets crashed. Tech stocks have been hit particularly hard, with weaker sales and profit warnings hitting the growth market and driving tech stocks down.
Daniel Newmann, speaking to “MarketWatch”, sees an opportunity for certain tech stocks in the current bear market, which would develop positively even if the market did not. According to the Futurum analyst, declining markets offer a good opportunity to buy shares in attractive companies. “And history also shows that bear markets tend to turn around once there is greater certainty about policy, making times like this a potentially profitable moment to get constructive and buy companies with excellent long-term prospects.”
The expert sees four main trends in the market: he is convinced that automation, artificial intelligence (AI), cloud and cyber security will become even more important in the future and will boom in the long term. The expert presents a company from each of the areas.
ServiceNow: Increasing demand for automation processes during the crisis
One company that has consistently exceeded the expected growth rate is ServiceNow. The software company specializes in the automation of workflows in a broader sense, not just in IT. Operational tasks and business processes can be further automated based on the existing IT infrastructure. Especially in the crisis, this is an attractive offer for companies that have to reduce their workforce.
The company’s shares hit an all-time high of $707.60 in November 2021, currently trading at $369.13 on the NYSE, stronger than the NASDAQ (-34.03 percent) fell by 47.35 percent (closing price October 14, 2022). According to the expert, increasing demand in a weak market environment and the resulting increase in profits at ServiceNow will have a positive effect on the company’s share price in the long term.
Cloud data warehouses: Oracle and Snowflake
Companies like Oracle and Snowflake are serving huge demand in a fast-growing market, with cloud-based data platforms forecast to grow at a compound annual rate of over 30 percent to reach $39 billion by 2026.
In the future, companies will invest more in intelligent analysis systems to improve their business processes and decisions, and Warren Buffett was also convinced of Snowflake. The relatively young company was able to increase its sales in the second quarter of 2022 by 83 percent compared to the previous year and significantly expand its customer base, significantly exceeding forecasts. The forecast for 2023 was increased to just over $500 billion, which would represent a sales increase of over 60 percent. This shows that Snowflake is growing significantly faster than the market environment. According to expert opinion, the company could even become one of the world’s leading software providers.
Oracle leveraged its broad customer base to grow its annual revenue to over $10 billion and achieved revenue growth of over 50 percent in the most recent quarter thanks to its aggressive pricing strategy.
Daniel Newman sees enormous growth potential for the shares of both companies, as they have fallen far short of their potential at -55.02 percent (Snowflake) and -26.26 percent (Oracle) since the beginning of the year (closing prices October 14, 2022).
Cybersecurity: Opportunity for Palo Alto Networks
The demand for technologies to secure IT systems will continue to increase. The pressure on companies to invest in cybersecurity is increasing. The Futurum analyst sees Palo Alto Networks clearly ahead here, as the company has steadily expanded the areas of legacy architecture and modern IT networks (next-generation services) through company acquisitions, among other things, and with growth of 27 percent in the last quarter in profitability has returned.
Palo Alto recently launched its XSIAM platform, which is designed to detect threats within 10 seconds on average and respond to them within a minute. The number of alarms to be checked by analysts is to be reduced by 80 percent. CPO Lee Klarich told SC Media, “Cortex XSIAM establishes an autonomous SOC where organizations can respond to threats in a fraction of the time it takes today and analysts can focus on the highest priority incidents. The SOC of the future will be built on AI and automation – any other approach is doomed to fail.”
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