Tech Stock Analysis: Top Tech Trends for 2019; Part 1
Tech Trends for 2019
What will be the biggest tech stock trends in 2019? The top technologies that could disrupt the markets in 2019 include artificial intelligence (AI), cloud computing, cybersecurity, and biotech.
Then there are technologies on the periphery that will come more into focus in 2019, like smart materials. Wearable technology is everywhere, but devices that get implanted into the body could make a splash in 2019.
Blockchain could also buck the status quo in 2019. Investors will continue to punish cryptocurrencies, but there’s more to blockchain technology than digital coins.
As people become more connected, whether through the Internet of Things (IoT) or biometrics, there is a growing need for identity protection. Blockchain technology can provide individuals with increased security and provide corporations with encrypted, easy-to-verify recordkeeping.
If you’re a tech company like Facebook, Inc. (NASDAQ:FB)—or any other business that relies heavily on the Internet—2019 could be the year you embrace the “ethical Internet.” This means adopting technology that proactively deals with issues like cyber-bullying, suicide, isolation, and privacy.
But really, the top tech trends for 2019 could go in entirely different directions.
Case in point: In 2018, after nine bullish years, the Nasdaq experienced an unexpected downturn. The Technology Select Sector SPDR Fund (NYSE:XLK) suffered a similar (or worse) fate. After years of tech stocks rewarding investors, it was time to pay the piper in 2018.
2019: Year of the Unicorn IPO
In the wake of a busy 2018, “unicorn” tech initial public offerings (IPOs) will be the talk of Wall Street in 2019.
A unicorn is a company with a value of $1.0 billion or more at the time of its IPO. In 2018, 37 unicorn tech IPOs took place on U.S. stock exchanges. That figure is the highest since the height of the dotcom frenzy in 2000.
Expect that number to rise in 2019. Some of the most anticipated tech unicorns are expected to prance onto Wall Street this year, including ride-sharing firms Uber Technologies Inc. and Lyft, Inc., workplace-messaging platform Slack Technologies, Inc., and the data mining warlock Palantir Technologies.
Lesser-known tech unicorns are also expected to have IPOs in 2019, including security firms CrowdStrike, Inc. and Cloudflare, Inc., video conference software provider Zoom Video Communications, Inc., and food-delivery service Postmates Inc.
On the tech unicorn IPO “maybe” list you’ll find Airbnb, Pinterest, and grocery delivery company Instacart. Those three companies have made no firm commitments, but they could debut on the public market in 2019.
Trending Tech Stocks
Tech stocks tend to follow the mantra of the late, great Andy Warhol: “In the future, everyone will be world-famous for 15 minutes.” It seems as though every tech stock has been trending at some point or another.
One of the biggest winners among the tech unicorns last year (at least before the market meltdown) was Docusign Inc (NASDAQ:DOCU). The electronic-signature company went public in April 2018 at $29.00 per share. On August 28, it hit an intra-day high of $68.35—for a four-month gain of 135%.
All that changed in October when the broader market experienced a sell-off.
Despite reporting better-than-expected third-quarter results in December 2018, with year-over-year revenue growth of 37%, the company’s share price has been flat. (Source: “DocuSign Announces Third Quarter Fiscal 2019 Financial Results,” Docusign Inc, December 6, 2018.)
DocuSign stock is down from its August highs, but it’s still up a lot compared to before.
MiX Telematics Ltd (NYSE:MIXT) is an excellent tech stock that few people seem to be talking about. The South Africa-based provider of driver safety vehicle tracking and fleet management services was very bullish last year.
By May 2018, the company’s share price had climbed 65% to $20.85. More recently, it shrugged off the October stock market sell-off.
MiX stock was helped by strong second-quarter financial results, which saw the company’s total revenue increase by 20.8%. (Source: “MiX Telematics Announces Financial Results for Second Quarter and First Half of Fiscal 2019,” BusinessWire, November 1, 2018.)
Tech Industries That Could Boom in 2019
Artificial Intelligence: Best AI Stocks for 2019
The Artificial Intelligence (AI) revolution is upon us—or has been for quite some time. AI has finally evolved to a point where it is making a significant impact on our lives.
In fact, it’s hard to find an industry where AI isn’t being used. Banking, software, Internet, automobiles, healthcare, are just a few sectors that have adopted AI technology.
AI uses complex computer algorithms and large amounts of data to find patterns, learn, and make predictions like humans. It’s going to be interesting to see where AI takes us over the next five to 10 years.
It’s tough to find overlooked stocks in the AI arena. Most of the big players are already very well known. The kind of infrastructure needed to be a leader in the AI field is not something you’ll find in someone’s basement.
With that in mind, here are some of the top AI stocks to watch in 2019.
Nvidia Corporation (NASDAQ:NVDA) is foundational to AI. For 30 years, microprocessor performance grew at a rate of 50% per year. But because of the limits of semiconductor physics, computer processors now only grow by 10% annually.
Nvidia is ahead of the curve and has all of the AI bases covered. Nvidia’s graphics processing unit (GPU) will provide a 1,000-times speedup by 2025. At the core of this speedup process is Nvidia’s “Cuda” platform.
Cuda can help speed up virtually any type of computing application, putting Nvidia at the front of the pack. It can be used in data centers, autonomous machines, self-driving cars, healthcare, deep learning, and more.
Alphabet Inc (NASDAQ:GOOG) has cornered a staggering 92.4% of the global search engine market. (Source: “Search Engine Market Share Worldwide,” StatCounter, last accessed December 27, 2018.)
Alphabet is hoping to be the same kind of leader when it comes to AI. It has a big head start on the competition.
AI is a predictive technology that evolves as relevant data is added, researched, analysed, and incorporated into a system. Suffice it to say, few businesses have more access to information than Alphabet.
To that end, the company has been snapping up AI firms and promoting its “AI first” vision, which means making major investments in non-core ventures like healthcare, finance, insurance, cybersecurity, transport, IoT, and robotics.
While Alphabet has a huge number of interesting AI investments—including “Google X,” “Calico,” “GV” (formerly “Google Ventures”), “Google Fiber,” and “CapitalG” (formerly “Google Capital”)—its subsidiaries Deepmind Technologies Limited (AI company), Waymo LLC (autonomous-driving company), and Nest Labs (home automation company), are the company’s leading AI developments.
Microsoft Corporation (NASDAQ:MSFT) has been developing AI software since the concept was a twinkle in the tech industry’s eye. In 2016, it created an AI and research group, which today is made up of more than 8,000 people.
In March 2018, Microsoft announced it was restructuring its business into three major divisions, giving even more attention to its cloud and AI offerings such as its “Microsoft Azure” platform.
Like Alphabet, Microsoft has been acquiring AI companies to help it further its agenda.
In 2017, Microsoft acquired Canadian startup Maluuba. It’s a deep-learning company that creates literate machines that can think, reason, and communicate like people. (Source: “Microsoft acquires deep learning startup Maluuba; AI pioneer Yoshua Bengio to have advisory role,” Microsoft, January 13, 2017.)
Cloud Computing: Best Cloud Stocks for 2019
Cloud computing is about providing on-demand computing services (storage, servers, databases, software, analytics, software, etc.) over the Internet (or the cloud).
Because cloud computing services are usually provided on a pay-as-you-go basis, businesses save money by avoiding upfront costs of owning and maintaining their own IT infrastructure.
The goal of cloud computing is to make operations faster and more efficient, allowing businesses to scale as needed.
Most people use the cloud on a daily basis without knowing it. This includes activities like using “Gmail,” backing up photos on smartphones, and streaming videos on “Netflix.”
Because the world is increasingly connected, more and more businesses are switching to the cloud.
The key players in cloud computing include Alphabet, Microsoft, IBM (NYSE:IBM), Hewlett Packard Enterprise Co (NYSE:HPE), salesforce.com, inc. (NYSE:CRM), and VMware, Inc. (NYSE:VMW). There are also a number of lesser-known cloud companies that could do well in 2019.
Qualys Inc (NASDAQ:QLYS) provides cloud-based security and compliance platform solutions to more than 10,300 businesses around the world, including more than 60% of the Forbes Global 500. (Source: “About Qualys,” Qualys Inc, last accessed December 27, 2018.)
The company expects to report full-year 2018 revenue of $278.4–$279.2 million. (Source: “Qualys Announces Third Quarter 2018 Financial Results,” Qualys Inc, October 30, 2018.)
Upland Software, Inc.
Upland Software Inc (NASDAQ:UPLD) provides cloud-based enterprise work management software to more than 4,000 customers and over 450,000 users around the world, including many Fortune 2000 companies.
Its customers operate in financial services, retail, technology, manufacturing, consumer goods, media, telecommunications, government, healthcare, and life sciences.
In November 2018, Upland announced that its third-quarter revenue advanced 42% year-over-year to $37.1 million. (Source: “Upland Software Reports Third Quarter 2018 Financial Results,” Upland Software Inc, November 8, 2018.)
Also in the third quarter, the Austin, Texas-based company’s adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) was $13.1 million, or 35% of total revenue. That was an increase of 57% from the third quarter of 2017.
On December 13, 2018, Upland announced that it had acquired Adestra Ltd., a provider of e-mail marketing, transaction, and automation software. The acquisition added about $18.0 million in annualized revenue. (Source: “Upland Software Acquires Adestra, Raises Guidance,” Upland Software, Inc., December 13, 2018.)
At the same time, Upland raised its full-year 2018 guidance for revenue, recurring revenue, and adjusted EBITDA.
RingCentral Inc (NYSE:RNG) is a cloud-based software application company that provides all-in-one phone, team messaging, and video conferencing solutions to American businesses.
In November 2018, RingCentral announced that its third-quarter revenue jumped 33% year-over-year to $174.0 million. (Source: “RingCentral Announces Third Quarter 2018 Results,” RingCentral Inc., November 11, 2018.)
Going forward, the company raised its revenue guidance for the fourth quarter to a range of $179.0–$182.0 million.
Subsequent to the end of the third quarter, RingCentral closed its acquisition of Dimelo, a cloud-based digital customer engagement platform. Dimelo’s customers span multiple industries, including telecom, financial services, insurance, and retail.
Furthermore, RingCentral extended its relationship with AT&T Inc. (NYSE:T), with AT&T reselling RingCentral solutions to its customers. RingCentral also announced that BT Group plc (NYSE:BT) has extended its “BT Cloud Phone” system, which is hosted by RingCentral.