With AI being all the rage, it’s no surprise that investors want to get their hand into the “cookie jar” of AI-adjacent stocks. Big data companies are going to be one of the biggest winners from this surge — they provide the data through which models are trained. The returns provided by these companies have regularly beaten market indices, and have often provided investors with consistent triple-digit growth. However, the sector is extremely competitive and volatile. Certain companies that were touted as “cash cows,” losing billions in market cap in a matter of a few hours. Remember, the dot-com bubble burst in 2001 led to multiple renowned tech companies going bust. While that is extremely unlikely to happen right now, there are companies that I believe are risky investments. Here are three big data stocks to sell.
Oracle (ORCL)
Our first option in big data stocks to sell is Oracle (NYSE:ORCL). Oracle offers services such as the Oracle Database and MySQL Database, and provides various tools for data integration, such as Oracle Data Integrator and Oracle GoldenGate. These help in the efficient movement and transformation of data across different environments.
ORCL is currently trading at $143.68 with a market cap of $383.1 billion. ORCL stock just missed EPS predictions for Q2 2024 by $0.02. Although Oracle has pretty good financials, the company will be faced with multiple headwinds in the coming days. A huge reason for that is TikTok’s potential ban in the United States. TikTok is one of Oracle’s largest customers and uses its cloud platform to store and process U.S. user’s data.
In a regulatory filing, Oracle mentioned that the law signed recently signed will make it illegal to provide internet hosting services to TikTok unless specific actions are taken by its China-based owners. Oracle also stated, “If we are unable to provide those services to TikTok, and if we cannot redeploy that capacity in a timely manner, our revenues and profits would be adversely impacted.” Given the looming threat of losing a significant client, investors should consider quitting their positions in Oracle.
Mercury Systems (MRCY)
Mercury Systems (NASDAQ:MRCY) is a technology company that provides solutions for big data applications, particularly in the defense and aerospace sectors. They specialize in secure sensor and mission processing subsystems, which integrate big data analytics to enhance real-time decision-making capabilities.
MRCY stock is down 22.61% year-to-date (YTD), and I expect this negative trend to keep going. The company has consistently missed EPS predictions over the past four quarters, making it unreliable and volatile. In addition, it has seen a negative profit margin of -16.08% and a year-over-year (YOY) quarterly earnings growth of -34.20%, indicating that its earnings have significantly reduced. The company is also overvalued right now, with analysts predicting a stock value of $26.00, $0.99 lower than the current value of the stock of $26.99.
The company’s financial instability and negative growth trends underscore the risks associated with holding onto this stock. Mercury Systems is continuing to underperform with limited potential for recovery, making it one of the big data stocks to sell.
Cognizant Technology Solutions (CTSH)
Cognizant Technology Solutions (NASDAQ:CTSH) leverages big data technologies to help businesses manage and utilize large volumes of data. It offers services such as data analytics, data management and business intelligence. They assist clients in extracting insights from big data to make informed decisions and improve operational efficiencies across various industries.
CTSH stock is currently trading at $68.00 with a market cap of $33.81 billion. CTSH is down 8.9% YTD, and I expect this negative trend to continue. While CTSH’s financials don’t raise a lot of red flags, the company is poised for a decline. The company has a YOY quarterly earnings growth rate of -5.8%, indicating that earnings have fallen over the past quarter.
Cognizant has a ‘recommendation rating’ of 2.8 on Yahoo! Finance, indicating that a number of analysts recommend selling/holding the stock.
On the date of publication, Achintya Pasricha did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.