Tech valuations have been whipsawed by rising rates of interest, steep inflation and financial uncertainty—but not a lot in enterprise software program. Demand is holding regular as companies proceed to reorient themselves round cloud computing and information, CIOs say.
Information-technology firms together with International Business Machines Corp.,
Hewlett Packard Enterprise Co.
and
Oracle Corp.
have proven resilience amid a rout in know-how shares. All three have to this point outperformed declining market benchmarks since the begin of the yr.
As of Wednesday, the tech-heavy Nasdaq Composite Index had fallen greater than 23% since January. Over the identical interval, share costs for IBM, which sells cloud-based enterprise software program and providers, rose 4.3%.
Prices for HPE, a enterprise software program agency spun off laptop maker Hewlett Packard, have held roughly regular. On Wednesday, the firm reported $6.7 billion in gross sales for the quarter ended April 30, up 1.5% year-over-year, with on-line software program orders roughly doubling from the earlier yr.
Shares of software program firm Oracle haven’t fared as properly, falling roughly 17% this yr by means of Wednesday. But its costs have constantly remained above sliding tech-market benchmarks. In March, the firm reported double-digit growth in cloud revenue for the quarter resulted in February.
“Enterprise IT is considered safer and less fickle than consumer tech by investors,” mentioned
Karena Man,
guide at administration consulting agency Egon Zehnder. When the dotcom bubble burst in the early 2000s, client digital valuations have been worn out. “But enterprise tech was still where investors were putting their money,” she mentioned.
Demand for enterprise know-how was evident final week when semiconductor big
Broadcom Inc.
mentioned it might purchase
VMware Inc.
in a deal valued at $61 billion. VMware is known for virtualization technology, during which software program is used to interchange costlier bodily tools.
“There’s more demand for technology than there ever was before,” mentioned
Jim Swanson,
government vice chairman and enterprise chief info officer at New Brunswick, N.J.-based healthcare and consumer-goods big
The Covid-19 pandemic laid naked the significance of capabilities like cloud-based enterprise instruments for adapting to sudden adjustments in the market and weathering unsure occasions, he mentioned.
In the identical manner companies turned to cloud computing in the pandemic—for distant work, buyer providers and productiveness—they might be smart to proceed, Ms. Man mentioned. “Companies hoping to minimize risk exposure and anticipate future volatility challenges should be thinking about this now,” she mentioned.
Demand for cloud computing providers, during which customers lease computing sources, is robust. Global spending on public cloud providers this yr is predicted to hit $494.7 billion, up 20.4% from final yr, IT analysis and consulting agency
Gartner Inc.
estimates. Many firms make use of a number of clouds, which creates a spread of choices for storing information or operating functions.
“The ability to easily choose where to place a workload based on cost efficiency is a key capability,” mentioned
Brennan Sullivan,
chief info officer at Quest Software Inc. “It’s such a basic necessity within any enterprise technology environment that at this point, I don’t see much correlation with the market’s moves.”
Enterprise tech firms are benefiting from the ongoing demand for cloud computing.
The Salesforce brand displayed at the New York Stock Exchange final month.
Photo:
Michael Nagle/Bloomberg News
Salesforce Inc.,
the cloud market’s largest pure-play vendor of subscription-based enterprise software program, on Tuesday reported quarterly revenue of $7.4 billion, up 24% from the identical interval a yr earlier. The firm, whose core product is customer-relationship administration software program, is on monitor to surpass $30 billion in annual income this yr.
The cloud-computing models of tech titans like
Microsoft Corp.
and
Amazon.com Inc.
have additionally continued to generate development. In April, Microsoft reported $23.4 billion in cloud revenue for the quarter by means of March, up 32% from a yr earlier, the firm mentioned.
For Amazon, the cloud was an island of energy in April, when the firm posted its first quarterly loss in seven years. Amazon Web Services, the firm’s cloud-computing service, reported $18.4 billion in first-quarter gross sales, up 37% from a yr earlier. Companywide, gross sales rose 7% to $116.4 billion.
Increasingly massive shops of knowledge are additionally changing into important to the manner most companies function, mentioned
Erik Bradley,
chief strategist at Enterprise Technology Research, a analysis agency. Mr. Bradley mentioned he expects demand for enterprise-tech platforms providing information governance, information administration and different analytic instruments to proceed rising no matter financial circumstances.
Last yr, data-analytics firm Databricks Inc. raised $1.6 billion in a single fundraising spherical, lifting its private-market valuation to $38 billion. In February, the firm reported $800 million in gross sales for 2021, an 80% improve from the earlier yr.
CIOs are nonetheless eager on know-how that helps their firms chase income development, so there’s “no real opportunity to retract spending,” mentioned
John-David Lovelock,
a analysis vice chairman and distinguished analyst at Gartner.
—Isabelle Bousquette contributed to this text.
Write to Angus Loten at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
