We recently published a list of The 10 cheapest tech stocks to buy according to analystsIn this article, we will look at how Kyndryl Holdings, Inc. (NYSE:KD) compares to other affordable technology stocks.

There is no doubt that technology continues to change rapidly. In a technology-rich world, investors and analysts have a lot to choose from. As we all know, artificial intelligence (AI) has dominated the conversations in recent years.

US stocks have recovered somewhat from recent lows as economic data has provided confidence in the health of the US economy. The Technology Select Sector SPDR Fund has seen a gain of over ~19% year-to-date. Much of this rally in the IT space has been driven by optimism around AI technology. However, some hints of interest rate cuts also supported the overall advance.

According to the latest data, the global AI market is valued at $196.63 billion (Grand View Research estimates), an increase of approximately $60 billion since 2022. This growth is due to the increasing practical use of AI technology, ranging from content creation to self-driving cars.

Growth of artificial intelligence (AI) and augmented reality (XR)

AI is expected to continue to evolve rapidly, with increased focus on areas such as natural language processing, computer vision and generative AI. PWC reported that by 2030, about 45% of total economic gains are expected to come from product improvements that drive consumer demand. AI is expected to lead to greater product variety with greater personalization, desirability and affordability. The largest economic gains from AI are expected to be in China (26% increase in GDP in 2030) and North America (14.5% increase). This represents $10.7 trillion and will account for about 70% of the global economic impact.

Extended Reality (XR), the convergence of Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality (MR), is expected to create immersive experiences across industries, especially in gaming and entertainment. The increasing use of smartphones, the greater penetration of smart electronic devices and the deployment of 5G technology are expected to be the key growth drivers of the Extended Reality market in North America.

Media companies in particular have been exploring the possibility of using XR technology as a storytelling medium and advertising tool for many years. XR’s interactive advertising campaigns and product visualization components are expected to drive growth in the advertising industry.

Cybersecurity technology – need and emergence

The cybersecurity technology market is estimated to be worth $190.4 billion in 2023 and is expected to reach $298.5 billion in 2028 (as per data from Markets and Markets), representing a compound annual growth rate of ~9.4%. This healthy growth is likely to be attributed to the increasing complexity of cyber threats, the expansion of the digital landscape, and the urgent need for data protection. Therefore, cybersecurity solutions such as data encryption, firewalls, and antivirus software are being used to protect and transmit data.

The story continues

Technologies such as AI, machine learning (ML), and automation are widely used in cybersecurity technology to improve threat detection and predictive analytics. Higher demand for industrial robots and increasing adoption of managed security services are expected to help create new market opportunities. In addition, robotic cybersecurity solutions tend to protect endpoints, and connectivity stacks help prevent data leaks and asset failures.

Trends in robotics

Robotic automation has gained wide acceptance across industries due to the introduction of digitalization and the Industry 4.0 revolution. As a result, there have been drastic changes in traditional production and operations processes. In Industry 4.0, smart factories are being developed in such a way that the machines can collaborate with human workers and other machines in real time. This is done by using cloud computing, IoT and cyber-physical systems.

The development of numerous production control techniques and the introduction of automation solutions continue to be the key components of the current production improvement policy. In addition, the popularity of industrial robots has led to their use in the manufacturing and healthcare sectors. In addition, demand is mainly driven by higher labor costs, which has prompted manufacturers to replace human labor with machines. Asia and Europe in particular are considered the most important growth regions in the world.

The growth in the smart factories or smart manufacturing space is expected to be driven by rapid digitization in various industries and the increasing demand for industrial automation. Another factor that is expected to support growth in the coming years is the extensive use of Manufacturing Execution Systems (MES) along with sophisticated data models for process-specific operations. The smart factory market continues to grow due to the increasing use of obsolete industrial robots and radio frequency identification (RFID) systems.

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A group of engineers in a data center ensures the reliability of IT.

Kyndryl Holdings, Inc. (NYSE:KD)

Forward P/E as of August 23: 11.03x

Upside potential: 31.58%

Expected EPS growth this year: Over 100%

Kyndryl Holdings, Inc. (NYSE:KD) is a technology and infrastructure services provider. The company offers consulting, implementation and managed services across a range of technology areas to help clients manage and modernize enterprise IT environments.

Kyndryl Holdings, Inc. (NYSE:KD) has existing strengths in infrastructure services built over the years when it was part of the IBM Global Technology Services (GTS) business unit. The company is bringing forward the timing of its return to revenue growth. It is now targeting positive revenue growth in Q4 2025. This growth is expected to be driven by its optimism about AI adoption.

Kyndryl Holdings, Inc. (NYSE:KD) has capitalized on the AI ​​boom by providing consulting services and technical support to enterprise clients seeking to make sense of AI tools. As such, the company’s services are supported by a significant amount of operational data and its machine learning tools.

Next, the company is divesting itself of low-margin contracts acquired in a spin-off from International Business Machines Corporation (NYSE:IBM). This should help increase profit margins as sales move into sustainable growth mode.

Although Kyndryl Holdings, Inc. (NYSE:KD) operates in a capital-intensive industry, it has the hallmarks of a resilient company, benefiting from predictable revenue from long-term contracts, customer loyalty, and the ability to pass on inflationary costs.

Analysts at Oppenheimer began coverage on shares of Kyndryl Holdings, Inc. (NYSE:KD) on the 27th.^th June. They issued an “outperform” rating and a price target of $33.00. The number of hedge funds in Insider Monkey’s database owning shares of Kyndryl Holdings, Inc. (NYSE:KD) increased to 36 in the second quarter of 2024, compared to 31 in the previous quarter.

Tourlite Capital Management, an investment firm, has released its fourth quarter 2023 investor letter. Here is what the fund said:

Total KD 5th place on our list of the best affordable tech stocks to buy according to analysts. While we recognize KD’s potential as an investment, we believe some highly undervalued AI stocks promise higher returns, and in a shorter time frame. If you’re looking for a highly undervalued AI stock that shows more promise than KD but trades at less than 5 times earnings, read our report on the cheapest AI stock.

READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.

Disclosure: None. This article was originally published on Insider Monkey.