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Artificial Intelligence is the buzzword of the year. However, tech enthusiasts have been looking into other emerging trends keeping the sector busy. cloud and edge Computing, for example, are emerging trends that might sound the same but are completely different. Cloud computing focuses on centralized servers for large-scale data centers and processes data using a central cloud server regardless of the distance of its data sources. It is suited for non-time-sensitive requirements. On the other hand, edge computing focuses on on-site data processing for real-time analysis and low-latency needs.
The McKinsey Technology Council conducted a comprehensive study of technology trends, taking data from 2018 to 2022, and they found that cloud and edge computing are getting more popular. The sector scored a 4 in their Adoption Rate Score; for clarity, sectors are rated from 1 to 5, with 5 indicating mainstream adoption in the industry.
This places some companies in excellent positions to take advantage of the future demand. In our view, these three tech companies have a high potential to take advantage of this growing trend and possibly become a market leader.
Extreme Networks, Inc.(EXTR)
Extreme Networks, Inc. is a networking infrastructure company that offers networking solutions and software-defined area network (SD-WAN) equipment. The company provides automation, security applications, and analytics through its cloud SD-WAN solution. EXTR’s long-standing reputation and reliability in the industry have given it several opportunities to work with big companies in critical sectors like government, healthcare, hospitality, retail, transportation, etc.
Extreme Networks offers enterprises the best software, Wi-Fi, and switching equipment. With the ongoing adoption of cloud computing, edge computing, A.I. applications, and cloud networking solutions, EXTR is poised to gain a significant market share due to the superiority of its offerings like Extreme Cloud Edge and other Machine Learning and A.I. solutions.
Analyst Ratings
Analysts rate EXTR as a “Moderate Buy” based on 3 Strong buys, 1 Moderate buy, and 2 Hold recommendations from analysts. The mean target for EXTR is $32.83, and the high target is $35.00, an upside of 44.57%.
Lattice Semiconductor Corporation (LSCC)
Lattice Semiconductor Corporation is a leader in low-power FPGA (field programmable gate array) solutions. LSCC focuses on providing customers with custom solutions to solve customer problems from the Edge to the Cloud. In addition, LSCC offers licensing through its IP (intellectual property) as part of its business model.
The company continues to grow both its revenue and earnings. On a year-on-year basis, LSCC has increased its revenue by 18% and boasts a modest increase in net income. Its Avant-E Field-Programmable Gate Arrays represent LSCC’s entry into the mid-range FPGA market, which is predicted to increase the company’s market share to $6 billion.
Analyst Ratings
Analysts rate LSCC as a “Strong Buy” based on 7 Strong buys and 2 Hold recommendations. The mean target is $113.12, and the high target is $188.00, a 116.49% upside.
Flex Limited (FLEX)
Flex Ltd. (formerly Flextronics Intl. Ltd.) manufactures manufacturing and supply chain solutions. It has three main segments of operations: the FAS (flex agility solutions), which focuses on the enterprise, communications, and cloud markets; Nextracker for solar software and tracker solutions; and FRS (flex reliability solutions), which caters to the health, and industrial and renewable sectors.
FLEX’s first quarter 2024 (ending June 30, 2023) results show its robust product portfolio strength. The company reported EPS beat analyst expectations by 21.95% while net income grew by 30.99%. The strong start of the fiscal year can be a sign of better things to come. No wonder analysts love FLEX.
Analyst Ratings
Analysts rate FLEX as a “Strong Buy” based on 4 Strong Buy and 1 Hold recommendation from analysts. The mean target is $32.50, and the high target is $35.00, with an upside of 36.56%.
Final Thoughts
The tech industry is one of the fastest-growing sectors, and the market closely follows its different segments for new trend makers.. While artificial intelligence may be the year's flavor, there is no doubt that other segments like machine learning and edge, quantum, and cloud computing are catching up. The next question is, which will be the tech sector's next darling?
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
