We recently compiled a list of the 8 Best Information Technology Services Stocks to Invest in Now. In this article, we are going to take a look at where Cognizant Technology Solutions Corporation (NASDAQ:CTSH) stands against other best information technology services stocks.
As per AXA Investment Managers, the US appears to be well-placed to continue to dominate the technology space. The frenzy related to generative artificial intelligence topped in June and tech stocks have underperformed the overall market since then. From the end of June to the end of October, the NASDAQ-100 Technology Sector saw a fall of over ~2% while the broader market (S&P 500) went up by over ~5%. AXA Investment Managers highlighted that the guidance from tech companies concerning new products and services demonstrates that earnings growth is expected to remain healthy moving forward.
Even though AI technologies are more prevalent in the consumer products category, many experts believe that we are in the early stages of this tech revolution.
Generative AI and Hyperautomation – Well-placed for a Next Revolution
Over the past few years, tech industry veterans have been amazed by the potential of generative AI. Moving forward, in 2025, Forbes believes that market players will begin seeing organizations move beyond this hype. This means that companies are expected to integrate generative AI into their business strategy. In the earlier wave of the AI revolution, experts saw leading tech companies rethink and transform their existing business models like online advertising, retail, and media streaming.
Forbes highlighted that 2025 can be a year of change. This is because more strategic use cases – such as realigning business models concerning the potential of generative AI – are expected to come forward. Therefore, there can be generative tools and applications enabling entirely new possibilities throughout different industries such as healthcare, manufacturing, education, and several other industries.
As per ConnectWise, one of the most important emerging technological trends is hyperautomation. It revolves around the end-to-end unification of automated functions powering efficiency at scale. Several organizations have been leveraging AI, ML, and robotic process automation (RPA) in a bid to automate independent business functions in a highly integrated way.
While several technologies leveraged AI in automation, the strong dynamics of hyperautomation should not be overlooked. One of the biggest trends is increased productivity and accessibility of the technology. The secondary impacts of this expansion should be seen across every industry as full-scale digital transformation becomes feasible. Talking about the industry-specific applications, in manufacturing, hyperautomation should help in enhancing production efficiency in factories and in healthcare, this technology will help in automating sensitive data processing and gain insights into patient care.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Intelligent Enterprise- An Idea or a Reality
A trend that is likely to revolutionize the broader technology industry is the idea of intelligent enterprise. As per SAP, this concept revolves around using data assets in a bid to achieve the desired outcomes faster with lesser risk and anticipating and proactively responding to customer needs. As per Future Market Insights, the intelligent enterprise data capture software market could see a CAGR of ~12.70%. By 2034, this market could soar to a strong valuation of US$37,189.90 million. The increased adoption of automation technologies across businesses should result in increased demand for intelligent enterprise data capture software.
With the help of automating data extraction and processing tasks, the technology supports businesses seeking to streamline workflows.
A close-up view of TV or Internet-connected devices used for telecommunication services.
Our Methodology
To list the 8 Best Information Technology Services Stocks to Invest in Now, we used the Finviz screener to extract the relevant stocks. Finally, the stocks having the highest hedge fund holdings were considered. The list has been arranged in the ascending order of their hedge fund sentiment, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Cognizant Technology Solutions Corporation (NASDAQ:CTSH)
Number of Hedge Fund Holders: 39
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is a professional services company, that offers consulting and technology, and outsourcing services in North America, Europe, and internationally.
Wall Street remains optimistic about Cognizant Technology Solutions Corporation (NASDAQ:CTSH)’s recent acquisition of Belcan. This strategic move is being seen as a long-term investment in high-quality engineering talent. The Belcan acquisition should enhance the company’s service offerings and diversify the client base, which will help in reducing reliance on the healthcare and financial services sectors. This acquisition should strengthen Cognizant Technology Solutions Corporation (NASDAQ:CTSH)’s market position and contribute to revenue growth.
The adoption of GenAI should increase in fiscal year 2025, potentially aiding its growth strategy. Its expansion in aerospace and defense sectors, with the help of the Belcan acquisition, offers new opportunities for revenue diversification. Cognizant Technology Solutions Corporation (NASDAQ:CTSH)’s expertise in IT services and consulting enables it to support clients in implementing and leveraging GenAI solutions. This will fuel new business and increase the value of existing contracts.
The integration of GenAI capabilities throughout the company’s service portfolio should result in enhanced productivity, innovative solutions, and differentiation amidst strong competition. JPMorgan Chase & Co. upped its price target on the shares of Cognizant Technology Solutions Corporation (NASDAQ:CTSH) from $82.00 to $89.00, giving a “Neutral” rating on 6th September.
Overall CTSH ranks 4th on our list of 8 Best Information Technology Services Stocks to Invest in Now. While we acknowledge the potential of CTSH as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CTSH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.