We recently published a list of 10 High Growth IT Stocks To Invest In Now. In this article, we are going to take a look at where EPAM Systems, Inc. (NYSE:EPAM) stands against other high growth IT stocks to invest in now.
The global IT services market is experiencing significant growth and is on track to grow at a compound annual growth rate of 9.5% from 2024 to 2030, as estimated by Grand View Research. This expansion is particularly pronounced in developing economies such as India and China, driven by the increasing adoption of cloud computing and advanced digital technologies.
Growth in this industry is driven by several factors, including increasingly stringent data privacy regulations and heightened concerns over cybersecurity, compelling enterprises to invest heavily in robust IT solutions. The widespread adoption of advanced technologies such as artificial intelligence, machine learning, and the Internet of Things has further fueled market demand. As businesses across various industries embrace digital transformation, they are turning to IT service providers to meet their evolving needs. The shift towards remote and hybrid work models has necessitated robust IT infrastructure to ensure seamless operations, especially for large enterprises. Cloud computing has emerged as a key driver of market growth, enabling businesses to migrate their critical operations to the cloud and leverage IT services to securely manage these environments. Additionally, the increasing adoption of software-as-a-service models has led to a surge in IT expenditures, as organizations seek to streamline their business processes and focus on core competencies.
Is The Tech Sector Still Booming?
On November 13, Keith Lerner, Co-Chief Investment Officer at Truist Wealth, and Mark Malek, Chief Investment Officer at Siebert Financial, appeared on CNBC and highlighted their outlook for the tech sector outlook.
Lerner expressed a continued preference for technology stocks, particularly those involved in software development. He noted that software companies are increasingly automating processes and driving efficiency across various sectors. This trend positions them well for future growth, even if there are short-term fluctuations in the market. Lerner highlighted that despite any potential pullback due to rising yields or inflation concerns, he views software stocks as having strong leadership potential.
Malek concurred with Lerner’s positive outlook on technology but emphasized a selective investment approach within this sector. He pointed out that ongoing supply chain issues are affecting the chip industry, which could impact performance in certain areas of technology. However, he maintained that significant opportunities exist within the AI ecosystem and other technology-related fields.
As the global IT services market continues to expand at an impressive pace, driven by technological advancements and increasing digital adoption, information technology stocks may be well-positioned to go higher. Given this context, we’re here with a list of 10 high growth IT stocks to invest in now.
Our Methodology
We used Finviz to compile an initial list of IT stocks with high 5-year compound annual growth rates. From that list, we narrowed our choices to 10 high-growth IT stocks that analysts were the most bullish on. The stocks are ranked in ascending order of analysts’ upside potential.
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).
A close-up of a coder at a computer, coding away to bring the latest software service to life.
EPAM Systems Inc. (NYSE:EPAM)
5 Year Revenue CAGR: 16.44%
Average Upside Potential as of November 14: 5.52%
EPAM Systems Inc. (NYSE:EPAM) specializes in software engineering services, digital platform engineering, and digital product design, operating out of Newtown, Pennsylvania. EPAM is a founding member of the MACH Alliance. It offers a range of services including infrastructure management, operations, consulting, and digital design, and serves clients across various industries, including finance, travel, technology, and healthcare.
The company is actively investing in AI-driven solutions and capabilities to drive growth and innovation. Its three-pronged AI strategy includes internal transformation, client-focused solutions, and a robust partner ecosystem. Internally, it is investing in its workforce through AI-powered training and up-skilling programs to enhance efficiency and productivity. For its clients, it’s developing and deploying AI-powered solutions, such as EPAM DIAL, EPAM AI/Run, and EPAM EliteA, to address specific business needs. Additionally, EPAM Systems Inc. (NYSE:EPAM) is collaborating with key technology partners to accelerate AI adoption and deliver innovative solutions.
It has seen significant traction in AI-related projects, including the development of large-scale AI ecosystems and AI factories, the implementation of AI-driven transformation programs, and the creation of AI-powered tools like StatGPT. StatGPT, in particular, is a platform that leverages AI to access and analyze economic data using natural language queries.
The company’s third-quarter revenue for 2024 was up 1.34% as compared to the year-ago period and amounted to $1.17 billion. By investing in AI and leveraging its strong global delivery capabilities and deep industry expertise, EPAM Systems Inc. (NYSE:EPAM) is well-positioned to capitalize on the growing demand for AI-driven solutions.
White Falcon Capital Management stated the following regarding EPAM Systems, Inc. (NYSE:EPAM) in its Q3 2024 investor letter:
“IT services companies – Endava and EPAM Systems, Inc. (NYSE:EPAM) – have been the main detractors for our portfolio this year. Admittedly, we have been early. However, we have checked and rechecked our work and believe these businesses are nearing their bottom. In the appendix to this letter, we outline our investment thesis for Endava and explain why we think it deserves to be our top position in the portfolio. We believe Endava (and EPAM) present a compelling opportunity due to their (1) solid position in the growing IT services sector, particularly in digital transformation and AI implementation, (2) overall business quality and founder led management teams, and (3) cheap valuation where we believe they are trading for a trough multiple of trough earnings. Despite recent revenue challenges, these businesses have maintained positive free cash flow. In fact, EPAM has been on the offensive and used its cash reserves to make four acquisitions in the last 12 months taking advantage of the weak IT spending environment. With improving IT spending and a strong management team Endava and EPAM are well-positioned for recovery and long-term growth.”
Overall, EPAM ranks 8th on our list of high growth IT stocks to invest in now. As we acknowledge the growth potential of EPAM, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EPAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.