In this article, we will take a look at the 5 best information technology services stocks to buy. To see more such companies, go directly to 12 Best Information Technology Services Stocks to Buy.
5. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Holders: 63
Accenture Plc (NYSE:ACN) is one of the biggest IT services companies in the world. Accenture Plc (NYSE:ACN) provides services and solutions across several IT domains, including data, infrastructure, automation, Cloud, security, supply chain and more.
Hedge fund sentiment for Accenture Plc (NYSE:ACN) jumped during the fourth quarter, according to Insider Monkey’s proprietary database of 943 hedge funds. 63 hedge funds reported owning stakes in Accenture Plc (NYSE:ACN) at the end of the period, up from 58 hedge funds in the previous quarter. The biggest stakeholder of Accenture Plc (NYSE:ACN) was Guardian Capital’s GuardCap Asset Management which has a $387 million stake in the company.
ClearBridge Sustainability Leaders Strategy made the following comment about Accenture plc (NYSE:ACN) in its Q4 2022 investor letter:
“Accenture plc (NYSE:ACN) is a leading global professional services company that helps clients build their digital infrastructure and optimize their operations. We view Accenture as a resilient, high-quality business with consistent earnings and cash flow, a strong balance sheet and very attractive returns on capital. Secular drivers like cloud migration and digital transformation, as well as new, innovative technology deployments like data security, block chain, AI and machine learning position Accenture well for continued growth. It is also currently rolling out a suite of sustainability tools that offers a comprehensive view of a company’s goals, progress and performance across financial and ESG measures, so it is an enabler of ESG for its clients. We exited our position in software-as-a-service company Workday to fund the position, largely on better relative risk/reward, in our view.”
4. Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Holders: 65
Oracle Corporation (NASDAQ:ORCL) offers a variety of IT services, related to databases, virtualization, Cloud infrastructure, enterprise and more. Oracle Fusion Service is a platform offered by Oracle Corporation (NASDAQ:ORCL) that helps companies automate their customer services flows. Some other services products of Oracle Corporation (NASDAQ:ORCL) famous among major companies include Demantra, Hyperion, E-Business Suite, Oracle Siebel, among others.
As of the end of the last quarter of 2022, 65 hedge funds were bullish on Oracle Corporation (NASDAQ:ORCL). The biggest hedge fund stakeholder of the company was First Eagle Investment Management of Jean-Marie Eveillard which owns a $1.7 billion stake in Oracle Corporation (NASDAQ:ORCL).
Madison Sustainable Equity Fund made the following comment about Oracle Corporation (NYSE:ORCL) in its Q1 2023 investor letter:
“During the quarter, we established a new position in Oracle Corporation (NYSE:ORCL) as the company’s growth profile has improved from a low single digit revenue growth company to high single digits. The key drivers of improved growth come from the company’s Software-as-a-Service applications and the Oracle Cloud Infrastructure (OCI). Oracle’s software applications power the Enterprise Resource Planning and Human Capital Management functions of large and small-to-medium sized businesses and are growing in the mid-teens. OCI is a differentiated cloud infrastructure provider that is gaining share due to its strong value proposition in speed, performance, and security. In addition, we believe that the company’s operating margins will improve from scale benefits in OCI and cost efficiencies from its recent acquisition of Cerner.”
3. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 70
Cisco Systems, Inc. (NASDAQ:CSCO) is no longer limited to selling routers and switching. Cisco Systems, Inc. (NASDAQ:CSCO) has made a rapid shift to software and IT services and provides consulting services, packaged services and support services in the IT industry.
As of the end of the last quarter of 2022, 70 hedge funds had stakes in Cisco Systems, Inc. (NASDAQ:CSCO). The total worth of these stakes was over $3 billion. The biggest stakeholder of Cisco Systems, Inc. (NASDAQ:CSCO) was John Overdeck and David Siegel’s Two Sigma Advisors which owns a $456 million stake in the company.
Artisan Value Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q4 2022 investor letter:
“We had one sale this quarter, exiting network equipment company Cisco Systems, Inc. (NASDAQ:CSCO). We chose to use the proceeds on more attractive value opportunities as Cisco’s growth has come in below what we had hoped for, and the company is increasingly looking at M&A to augment its growth rate.”
2. ServiceNow Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 97
ServiceNow Inc. (NYSE:NOW) is a market leader in the IT Service Management sector. Its solutions help companies manage their digital workflows. It ranks 2nd in our list of the best information technology services stocks to buy. ServiceNow Inc. (NYSE:NOW) posted strong Q1 results. Revenue in the quarter jumped 22.1% year over year to reach $2.1 billion, beating estimates by an impressive $10 million. Most importantly, the subscription revenue of the company increased 24% year over year in the quarter.
As of the end of the fourth quarter of 2022, 97 hedge funds were long ServiceNow Inc. (NYSE:NOW). The biggest hedge fund stakeholder of ServiceNow Inc. (NYSE:NOW) was Christopher Lyle’s SCGE Management which owns a $363 million stake in the company.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 240
Though not a pure play IT services company, the sheer size and penetration of Amazon.com, Inc. (NASDAQ:AMZN)’s Cloud platform, AWS, and the services Amazon provides to companies in deployment and maintenance of AWS makes it a noteworthy name in the industry. During the first quarter of 2023 Amazon.com, Inc. (NASDAQ:AMZN)’s AWS revenue came in at $21.35 billion. AWS provides services related to AI, machine learning, storage, server-less computing and more.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the favorite stocks of hedge funds. Insider Monkey’s database shows that 240 hedge funds had stakes in the company as of the end of the fourth quarter of 2022.
Polen Global Growth Strategy made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2023 investor letter:
“We raised our position in Amazon.com, Inc. (NASDAQ:AMZN). During 2022, Amazon’s business experienced revenue deceleration from pre-pandemic levels combined with higher expenses resulting from inflation pressures as well as costs in their fulfillment segment. The fulfillment costs were set in motion during the pandemic when demand overwhelmed their network. More recently, AWS – along with Azure and GCP – experienced a deceleration in growth as customers globally feel pressure to optimize their usage in this tough macroeconomic environment. We don’t expect this deceleration to persist for the long-term given the secular trend of companies transitioning to the cloud.
For long-term investors, we believe this combination provides an opportunity and that Amazon is now poised to re-accelerate revenue growth, of which we are already seeing signs, while expanding margins and free cash flow. With respect to margins, given the fast growth in AWS and advertising, the latter generating almost $40 Billion in sales and growing at greater than 30% recently, the resulting mix-shift could result in operating margins of 10% or higher over time. This level would represent a 5x increase over 2022 levels. In sum, we are capitalizing on what we believe is arguably one of the most competitively advantaged business in the world, which is growing well, poised to accelerate that growth and expand margins, and is trading at an attractive price.”
You can also take a peek at 10 Most Profitable Small Businesses in 2023 and 10 Best April Dividend Stocks To Buy.
