Biggest Tech Trend in 2023 Artificial Intelligence. The rapid and furious pace of AI announcements from Microsoft, Salesforce, AWS, Google and Meta Platforms made this clear.
But as tech companies cut staff and try to do more with less, digital transformation activities including automation, analytics, hybrid cloud and cybersecurity are also gaining momentum. This is what I mentioned at the end of 2022.
In short, companies want to accelerate growth, protect data and maximize existing investments in technology and software. These five tech giants appear to be well equipped to help their clients achieve these goals;
1. Cisco Systems. Cisco Systems recently reported solid quarterly earnings and increased its dividend. While Cisco has benefited somewhat from easing supply chain issues and a weaker US dollar, my focus is on the company's strong position in data centers, 5G, security and hybrid performance.
In a conversation with President and CEO Charles Robbins, I had the opportunity to discuss Cisco's transition to recurring revenue and its growing software business. Now at more than 40% of its recurring earnings, the company's reputation as a leading IT investment firm is starting to transition into a more interesting story with annual recurring earnings that should ultimately provide a higher multiple for the stock if properly valued become : Additionally, Cisco products are part of the plumbing for most AI transitions, and it's not a gimmick, making Cisco an attractive investment candidate.
2. Oracle. The shortfall in Oracle's latest earnings report was offset by a rise in net income, and like Cisco, Oracle raised its dividend again.
While Oracle's business accounts for more than 70% of predictable recurring revenue, the biggest concern for investors should be the strength of its cloud business. Its growing cloud business is currently worth $16 billion a year and growing 45%, while its infrastructure as business services grew 55% in the last quarter. This growth outpaces key competitors AWS, Microsoft and Alphabet, which all reported significant growth in their most recent reports, but averaged around 30%. In addition, Oracle has an interesting place in AI history as it houses a large number of proprietary enterprise data sets that will be critical to the next wave of generative AI solutions for the enterprise.
3 Broadcoms. In a cash-driven market, Broadcom's latest quarterly adjusted EBITDA of over 64% is very good for a semiconductor, software and infrastructure company.
With revenue and net income growth and a forecast of 8% annual growth, Broadcom looks like an attractive bet. Although the chipmaker market has been tough, Broadcom has performed well, and under CEO Hock Tan, the company has focused on operating efficiently to make periods of macroeconomic uncertainty less of a concern.
Broadcom's impending big bet on VMware has drawn the ire of critics who believe Tan's leadership style will stifle the VMware ecosystem. I believe Tan's practice of focusing R&D spending on areas with the greatest growth potential will benefit VMware's customer base. Broadcom has the right leverage in this economy, making it an investment to consider in all economic conditions.
4. Hewlett Packard Enterprise. Just three years after CEO Antonio Neri announced the company's full transition to everything as a service, the HPE GreenLake business surpassed $1 billion in annual revenue and HPE's highest profitable quarter since 2017.
The company's balance sheet expanded, meaning the strong performance was not just accumulation, but stronger growth, including 25% year-over-year recurring revenue growth and 33% year-over-year revenue growth. revenue from total IaaS orders.
Speaking to Neri after the company announced its earnings, the CEO was quick to point out that the company's strategy is well established, even if the shift from selling high-performance IT equipment to subscription services won't be immediate . , the breakaway in the fourth led to a power play.
5. Adobe. Adobe surprised the market and outperformed all competitors by raising its target.
Companies need to send the right message to the right prospect, and this is the challenge in which they invest. Adobe is a key beneficiary of businesses using technology to increase productivity and generate revenue. While many cloud service and software providers are under pressure, Adobe is seeing growth in three key areas of its business: creative and digital experience.
In a brief conversation with Anil Chakraborty, president of Adobe's Digital Experience Business, after the earnings report, he mentioned the cross-portfolio sales line that serves as the backup for Adobe; continuous growth.
Daniel Newman is a Principal Analyst at Futurum Research who conducts or has provided research, analysis, recommendations or advice to ServiceNow, IBM, Nvidia, Meta Platforms, Oracle, MongoDB, Cisco, Juniper and other technology companies. Neither he nor his company has shares in the above companies. Follow him on Twitter @danielnewmanUV.
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