Following a challenging year, the tech industry is expected to witness a massive resurgence due to solid demand for advanced technology solutions across different industry verticals and growing tech spending. Given the industry’s favorable growth prospects, it could be wise to invest in quality tech stocks Nokia Oyj (NOK), Juniper Networks, Inc. (JNPR), and AudioCodes Ltd. (AUDC) this month.
The technology industry encountered significant difficulties in 2022. Macroeconomic headwinds, including supply chain issues, geopolitical unrest, high inflation, and a rising interest rate environment, resulted in a more than 15% decline in the tech-heavy Nasdaq Composite index. Nonetheless, the industry is poised for rapid expansion, with numerous growth opportunities as technology influences every business and industry vertical.
The tech industry’s growth prospects look promising with the increased adoption of new, emerging technologies, such as AI, blockchain, AR&VR, metaverse, and the Internet of Things (IoT), to accelerate enterprise innovation and digital transformation. Additionally, cloud adoption has rapidly accelerated, resulting in several organizations adopting a cloud-first strategy.
According to Gartner Inc. (IT), worldwide end-user spending on public cloud services is forecasted to reach $591.80 billion in 2023, up from $490.30 billion in 2022.
Moreover, worldwide IT spending is expected to reach $4.50 trillion in 2023, a rise of 2.4% year-over-year. John-David Lovelock, Distinguished VP Analyst at Gartner, said, “While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown.”
Investors’ interest in tech stocks is evident from the SPDR FactSet Innovative Technology ETF’s (XITK) 12.5% returns over the past three months. Against the backdrop, investors could consider buying fundamentally strong tech stocks NOK, JNPR, and AUDC this month to capitalize on the industry’s tailwinds.
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, NOK is a leading provider of mobile, fixed, and cloud network solutions. Its segments include Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies. It offers products and services for microwave radio links for transport networks and radio access networks spanning from 2G to 5G.
On February 25, 2023, it was reported that NOK would launch a handset that users can repair themselves. The handset would have a recyclable plastic back that could be readily removed to replace broken components.
As consumers demand more durable and long-lasting devices, the ability to inexpensively and easily repair smartphones could emerge as a key differentiator in the market. NOK should significantly benefit from this launch.
On February 22, NOK declared that it had secured a ten-year extension to its existing nationwide 5G network deal with Antina Pte. Ltd. As per the agreement, NOK is expected to build a 5G standalone network, and extend the existing network using Antina’s 3.5GHz spectrum holdings. The extension of this contract displays Antina’s confidence in NOK’s technological leadership and the strength of its product portfolio.
Also, on February 16, NOK and Tele2 announced a collaboration in Sweden to enable enterprises to utilize robust, reliable 5G private wireless to connect assets and unlock valuable operational data to realize cost, efficiency, and sustainability objectives.
By collaborating with Tele2 as part of their network offering and demonstrating the use cases, the company intends to benefit from the significant business potential of private wireless in Sweden.
NOK’s net sales grew 16.1% year-over-year to €7.45 billion ($7.86 billion) in the fiscal fourth quarter that ended December 31, 2022. Its gross profit grew 25.8% year-over-year to €3.19 billion ($3.36 billion), and its operating profit rose 19.2% from the prior year’s period to €882 million ($929.89 million).
Furthermore, the company’s profit and EPS rose 363.5% and 366.7% year-over-year to €3.15 billion ($3.32 billion) and €0.56, respectively.
The consensus revenue estimate of $6.15 billion for the first quarter (ending March 2023) reflects a 9.5% year-over-year improvement. The consensus EPS estimate of $0.08 for the ongoing quarter indicates a 10.9% rise from the previous year’s quarter. Moreover, NOK surpassed its consensus EPS estimates in three of four trailing quarters, which is impressive.
Shares of NOK have marginally gained over the past month to close the last trading session at $4.58.
NOK’s POWR Ratings reflect its solid outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a Value grade of A and a Growth grade of B. In the B-rated 49-stock Technology - Communication/Networking industry, it is ranked #4.
Beyond what we stated above, we also have NOK’s ratings for Stability, Quality, Sentiment, and Momentum. Get all NOK’s ratings here.
Juniper Networks, Inc. (JNPR)
JNPR designs, develops, and markets network products and services globally. It offers session smart routers, wide-area network SDN controllers, and routing devices. Additionally, the company offers technical assistance, maintenance, professional services, software as a service, and education and training programs.
On February 23, 2023, JNPR announced plans to expand its collaboration with International Business Machines Corporation (IBM) to pursue the integration of IBM's network automation capabilities with JNPR’s RAN optimization and Open Radio Access Network (O-RAN) technology. Such initiatives look promising for the company’s business development.
Moreover, on January 23, 2023, the company announced that Virgin Media O2, one of the largest fixed and mobile service providers in the United Kingdom with about 50 million online media connections, had upgraded its IP core backbone network with JNPR and was now capable of supporting 800G. This could aid JNPR in expanding its operations.
For the fiscal fourth quarter that ended December 31, 2022, JNPR’s total net revenues increased 11.5% year-over-year to $1.45 billion, while its gross margin grew 10.2% from the year-ago value to $827 million. The company’s non-GAAP operating income rose 16.1% from the prior year’s quarter to $276.50 million.
In addition, JNPR’s non-GAAP net income and EPS rose 15.8% and 16.1% year-over-year to $213.80 million and $0.65, respectively.
Analysts expect JNPR’s revenue to increase 8.6% year-over-year to $5.76 billion for the fiscal year ending December 2023. The company’s EPS for the current year is expected to rise 17.8% from the prior year to $2.30. Moreover, JNPR surpassed its consensus revenue estimates in three of four trailing quarters.
The stock has gained 6.1% over the past six months to close the last trading session at $30.77.
JNPR’s promising fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system.
JNPR has a B grade for Growth, Value, and Quality. It ranks #6 in the 49-stock Technology - Communication/Networking industry.
In addition to the POWR Ratings I’ve just highlighted, you can see JNPR’s ratings for Stability, Momentum, and Sentiment here.
AudioCodes Ltd. (AUDC)
Headquartered in Lod, Israel, AUDC offers cutting-edge productivity solutions and communications software for the digital workplace. Its offerings include media gateways, servers, life cycle management solutions, VoIP network routing solutions, session border controllers, and more.
On February 7, 2023, Shabtai Adlerberg, AUDC’s President and CEO, said, “We see growing business activity in UCaaS and CX, and with the ongoing proliferation of AI in the enterprise, we believe we are well-positioned to extend our leadership in applying AI to voice applications and emerge a stronger and more competitive player.”
AUDC’s total revenues for its fourth quarter, which ended December 31, 2022, increased 6.9% year-over-year to $70.66 million. Its gross profit grew 3.9% from the year-ago value to $46.16 million, while its income before taxes on income rose 8.6% year-over-year to $9.01 million.
Additionally, the company’s net income came in at $7.55 million, reflecting a 4.1% year-over-year increase, and its EPS grew 4.5% from the prior-year quarter to $0.23.
Analysts expect AUDC’s revenue to grow 5.1% year-over-year to $288.99 million for the fiscal year ending December 2023. The company’s EPS for the ongoing year is expected to increase 3.4% from the previous year to $1.40. Shares of AUDC plummeted 1.7% intraday to close the last trading session at $16.30.
AUDC’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, equating to Buy in our proprietary rating system.
The stock has an A grade for Quality and a B for Stability and Value. Within the same industry, it ranks #7 of 49 stocks.
To see additional POWR Ratings for Sentiment, Growth, and Momentum for AUDC, click here.
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NOK shares were trading at $4.68 per share on Monday morning, up $0.10 (+2.18%). Year-to-date, NOK has gained 1.16%, versus a 4.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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