The tech industry is making a gradual comeback from an extended slump over the past couple of months as companies adjust their business structures to adopt hybrid working structures and focus more on digital transformation. This is evident in the tech-heavy Nasdaq Composite’s 5% gains over the past month and 1.4% gains over the past five days. Nasdaq closed at a 14,174.14-point all-time high on June 14, reflecting renewed investor interest as benchmark Treasury yields declined.
Due to the increasing adoption of hybrid work arrangements, the demand for advanced tech solutions is rising. Global IT spending is expected to increase 8.4% year-over-year to $4.10 trillion in 2021. Furthermore, IT spending is expected to rise slightly next year to $4.30 trillion.
Thus, we think shares of tech giants Alphabet Inc. (GOOGL) and Oracle Corporation (ORCL) could gain substantially in the coming months.
Alphabet Inc. (GOOGL)
GOOGL is one of the biggest technology companies in the world and is ranked 39 in the Fortune 500 list. It operates through three segments—Google Services, Google Cloud, and Other Bets.
On May 4, GOOGL signed a 10-year agreement with AES Corporation. Under the agreement, AES will supply electricity to power GOOGL’s data centers with 24/7 carbon free energy. The agreement demonstrates GOOGL’s commitment to sustainable growth–the company aims to operate on 100% carbon free energy by 2030.
GOOGL’s revenues increased 34.4% year-over-year to $ 55.31 billion in the fiscal first quarter, ended March 31. Its income from operations grew 106.1% from its year-ago value to $16.44 billion, while its net income improved 162.3% year-over-year to $17.93 billion. The company’s EPS increased 166.4% year-over-year to $ 26.29.
Analysts expect GOOGL’s revenues to increase 29.7% year-over-year to $236.79 billion in the current year. A $87.31 consensus EPS estimate for the current year indicates a 49% rise from last year. GOOGL also surpassed the Street’s EPS estimates in each of the trailing four quarters. Shares of GOOGL have gained 70.9% over the past year, and 38.6% year-to-date.
It is no surprise that GOOGL has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Sentiment, and a grade of B for Quality. Among the 70 stocks in the Internet industry, GOOGL is ranked #1.
To see additional GOOGL Ratings for Growth, Value, Stability and Momentum, click here.
Oracle Corporation (ORCL)
ORCL provides enterprise information technology services internationally. The company offers cloud software applications and hardware products and after sales services through direct and indirect channels. Its Oracle Fusion Cloud Enterprise Resource Planning (ERP) Software has been named a Leader in the 2021 Gartner “Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises” list for the fifth consecutive year.
On May 30, the Tasmanian government digitized its COVID-19 vaccination program with Oracle Health Management system. This software offering should boost ORCL’s financials significantly.
Amid rising demand for ‘Arm technology computing,’ ORCL announced its first Arm-based compute offering, OCI Ampere A1 Compute, on May 25. This offering should help the company attract new customers globally.
ORCL’s revenue increased 8% year-over-year to $11.23 billion in its fiscal fourth quarter, ended May 31. Its operating income grew 5% from the year-ago value to $4.54 billion, while its net income improved 29% year-over-year to $4.03 billion over the period. The company’s EPS increased 38.4% year-over-year to $1.37.
A $41.39 billion consensus revenue estimate for the current year indicates a 2.2% improvement from the prior year. Analysts expect the company’s EPS to come in at $4.81 for the current year, indicating a 3% rise year-over-year. Moreover, ORCL surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. ORCL has gained 26.2% year-to-date. The stock has gained 53.3% over the past year.
ORCL has an overall B rating, which equates to Buy in our proprietary rating system. ORCL has a grade of B for Value, Quality and Stability. It is ranked #10 of 125 stocks in the Software-Application industry.
Beyond what we’ve stated above, we have also rated ORCL for Momentum and Sentiment and Growth. Click here to view all ORCL’s Ratings.
Click here to check out our Software Industry Report for 2021
GOOGL shares were trading at $2,425.37 per share on Wednesday afternoon, down $3.02 (-0.12%). Year-to-date, GOOGL has gained 38.38%, versus a 13.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More…
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