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Nomura Instinet released its bi-annual survey of CIO spending, and the analyst team led by Jeffrey Kvaal, Christopher Eberle, Mark Kelley and David Wong selected their top winners and losers from the latest trends in IT budgets.
Nomura said the good news for tech investors is that the trade war has seemingly not had a major impact on spending.
In the past six months, 2019 IT spending growth projections have dropped slightly from 9% to 7.9%. However, only 8% of CIOs said the trade war is weighing on spending expectations. In addition, the average 2020 IT spending growth projection is 7.5%, down only slightly from 2019 levels.
Nomura once again found PC spending is most exposed to a downturn in spending. For the 10th consecutive survey, security is the top IT growth driver.
Winners And Losers
In the communications equipment and systems space, Nomura said Cisco Systems, Inc. (NASDAQ: CSCO) is a big winner from data center switching and security spending. Nomura named F5 Networks, Inc. (NASDAQ: FFIV) and Arista Networks Inc (NYSE: ANET) as other market winners, while Hewlett Packard Enterprise Co (NYSE: HPE) and IBM (NYSE: IBM) are losing market share.
Nomura reported 62% of vendors anticipate Microsoft Corporation (NASDAQ: MSFT) will gain software spending wallet share, while FireEye Inc (NASDAQ: FEYE) and Qualys Inc (NASDAQ: QLYS) are other big winners.
Nomura said Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) is the top internet stock to benefit from the migration to public cloud.
In the semiconductor space, Nomura chose Intel Corporation (NASDAQ: INTC) and its data center business as the biggest winner from IT budget growth.
Benzinga’s Take
A rising tide of IT spending will lift all boats in the tech space, but Nomura’s analysis suggests some boats are more buoyant than others. Even if growth numbers are trending in the right direction, it’s always a red flag for companies to be losing market/wallet share to competitors, so tech investors should keep watching spending trends closely.
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