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4 Stocks to Watch Amid Rise in Enterprise Software Spending

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Spending on enterprise software is expected to make a comeback this year, following the pandemic-induced slump that put a brake on such spending in 2020. Notably, per a report by Gartner, overall IT spending is expected to rise 8.4% in 2021 and reach $4.1 trillion, following a dip of 2.2% last year. Interestingly, among the segments of IT spending, Gartner stated that enterprise software is estimated to be one of the biggest areas of spending and looks set to rise 10.8% this year, and 10.6% in 2022, following a decline of 2.1% in 2020. Such a positive development is sure to bolster companies that provide software applications to enterprises.

So, why is enterprise software important? The answer lies in the fact that enterprise software provides businesses the support to run their operations efficiently with the help of various services and applications that can increase productivity. Moreover, enterprise software can help businesses in gaining useful insights from their operations and manage their customers more efficiently.

Markedly, enterprise software like customer relationship management has become crucial for companies as it allows them to keep a track of customers’ activities and their engagement with the company, thus providing them with better experience. Moreover, other enterprise software applications like business intelligence provide businesses insights into their operations by collecting and analyzing data, thereby allowing management to make informed and strategic decisions. Meanwhile, businesses are also making use of supply chain management software for efficiently managing the entire supply chain, right from manufacturing to delivery to the end-user.

Moreover, cloud-based services have seen rapid adoption in recent times as it allows enterprises to run operations at affordable costs without having to set up their own expensive infrastructure. Interestingly, cloud services took center stage last year when the coronavirus outbreak compelled people to stay at home. Businesses had to rapidly shift to a remote working model to ensure continued operations. Notably, with the help of cloud services, employees are free to access important data and applications from anywhere, simply with the help of an Internet connection.

4 Stocks to Keep an Eye On

Enterprise software looks set to witness accelerated spending this year and the next as businesses recover from last year’s spending slump. Hence, this seems like an opportune moment to take a look at companies providing enterprise software that can make the most of this comeback. Notably, we have selected four such stocks that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

ServiceNow, Inc. (NOW - Free Report) provides enterprise cloud computing solutions and operates the Now platform that offers workflow automation, artificial intelligence, machine learning, performance analytics, and so on. The company also provides an IT service management product suite for enterprise's employees, customers and partners, and so on. It currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 0.5% over the past 90 days. The company’s expected earnings growth rate for the current year is 18.8%.

salesforce.com, inc. (CRM - Free Report) develops enterprise cloud computing solutions with a focus on customer relationship management worldwide. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 10.8% over the past 60 days. The company’s expected earnings growth rate for the next five years is 18.4%.

Amazon.com, Inc. (AMZN - Free Report) provides compute, storage, database, analytics, machine learning, and other services, primarily through Amazon Web Services. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 2.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 37.3%.

SAP SE (SAP - Free Report) operates as an enterprise application software company worldwide and it offers SAP S/4HANA, an enterprise resource planning suite for intelligent technologies; SAP Integrated Business Planning for Supply Chain, a cloud-based solution that delivers real-time supply chain planning capabilities, and so on. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 1.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 3.6%.

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