While the market still loves rewarding AI-based companies, the trend is an early one. It will take time to roll out. And much like the rollout of the internet, there will be big winners and losers.
Fortunately, investors have other tech trends to profit from. That includes trends that are already bringing in revenues for companies today. One of the hottest such trends is cloud services. That’s been a big driver for many big tech companies.
But it’s a solid performer for other players as well. That includes related companies, such as cloud security firm Zscaler (ZS).
The company just reported a strong third quarter, but came in a little light on guidance. Analysts are fazed by that short-term trend at all.
Zscaler has been on a growth kick, with revenues up 40 percent over the past year.
While the company hasn’t reported a profit yet, shares have gone from over 130 times estimated earnings to 86. A continued drop and move to profitability should lead to shares trending higher.
Action to take: Investors may like shares here or on any further drop. Cloud spending is one area the market is rewarding right now outside of the AI space, and Zscaler likely has more room to run.
For traders, shares are in a strong uptrend.
The May 2024 $240 calls, last going for about $7,80, could see mid-to-high double-digit gains on a further continuation of the uptrend. Traders may want to take quick profits after any year-end rally.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.