We recently published a list of 15 Hot Tech Stocks to Buy Right Now. In this article, we are going to take a look at where Extreme Networks, Inc. (NASDAQ:EXTR) stands against other hot tech stocks to buy right now.
In 2024, the S&P 500 IT Sector Index outperformed the broader S&P 500 Index, rising approximately 36% compared to a 23% increase in the latter. This performance was underpinned by emerging trends and innovations, particularly generative AI (GenAI) and the huge investments that went into creating the infrastructure to support the growth of such technologies.
According to Gartner, the year 2025 might see a further uptick in investments. In its January 21, 2025 report, Gartner forecasts Worldwide IT spending to grow 9.8% year-over-year in 2025 to total $5.61 trillion. Among the segments, data center systems, devices, and software are projected to see double-digit growth in 2025 primarily due to GenAI hardware upgrades.
While increasing investment is a positive sign, John-David Lovelock, distinguished VP Analyst at Gartner, shared the complex intricacies of these investments in the report:
“While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending. This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations.
IT services companies and hyperscalers account for over 70% of spending in 2025. By 2028, hyperscalers will operate $1 trillion dollars’ worth of AI optimized servers, but not within their traditional business model or IaaS Market. Hyperscalers are pivoting to be part of the oligopoly AI model market.”
As indicated by these forecasts, technology continues to remain an exciting space in 2025.
Our Methodology
To shortlist the 15 hot tech stocks to buy, we screened companies with a market capitalization of at least $2 billion, more than 20% share price gains in the last 6 months and a potential upside of at least 20%. The stocks were then arranged in ascending order of their potential upside to arrive at the final list. We also included the number of hedge fund holders for each company based on hedge fund data from Insider Monkey’s database.
Note: All pricing data is as of market close on February 4.
At Insider Monkey we are obsessed with 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 customer service person helping a client with a complex network issue, illustrating the customer support of the communication equipment company.
Extreme Networks Inc. (NASDAQ:EXTR)
Upside Potential: 33%
Number of Hedge Funds: 29
Extreme Networks Inc. (NASDAQ:EXTR) delivers cloud-driven networking solutions that provide high-performance connectivity and network management for enterprises, service providers, and public sector organizations. The company also produces network switches, routers, and wireless access points, which are engineered to offer high-speed connectivity, network resilience, and scalability, serving organizations with both on-premises and cloud-based infrastructure. For data centers, Extreme Networks Inc. (NASDAQ:EXTR) offers a variety of solutions including high-density network switches, data center interconnects, and load balancing solutions that ensure high availability and low-latency connections for mission-critical applications.
Cloud computing, data centers, and enterprise network modernization are projected to drive long-term demand for the company’s networking and infrastructure solutions. Extreme Networks Inc. (NASDAQ:EXTR) continues to broaden its international reach, particularly in Asia-Pacific and Europe, where the demand for networking and cloud solutions is rapidly growing. In the latest earnings comments, management emphasized a robust growth trajectory in its data center solutions, highlighting high-performance switches and SD-WAN offerings, which have been especially popular among large enterprises and cloud providers.
Overall, EXTR ranks 7th on our list of hot tech stocks to buy right now. While we acknowledge the potential of EXTR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EXTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article was originally published at Insider Monkey.