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Huge Cloud Spending Top Catalyst for Data Networking Stocks to Buy

Any way you look at it, the tremendous growth in all things cloud is perhaps the biggest single catalyst in the tech industry today. Whether it is cloud computing, storage, streaming or the combination of all the above, the incredible leap by companies looking to take advantage of the technology provided is gigantic. In fact, capital expenditures in the cloud are the strongest tailwind for telecom and networking stocks, and the likelihood of that changing anytime soon is quite small.

In a new research report, while remaining somewhat cautious, Deutsche Bank focuses on the companies with big cloud exposure, with five stocks ranging in market capitalization from mega-cap to small cap for investors to consider now. All are rated Buy and make good sense for long-term aggressive growth portfolios.

Acacia Communications

This company had a red-hot IPO and has backed up sharply since a recent secondary offer. Acacia Communications Inc. (NASDAQ: ACIA) is a leading supplier of high-speed coherent optical interconnect products to network equipment manufacturers, hyperscale cloud companies and service providers. The company’s foundation is in its Digital Signal Processing (DSP) and a unique approach with its silicon-based photonic integrated circuit (SiPhi PIC). The company primarily combines the DSP and PIC to create modules, which are integrated into optical/networking equipment to provide high-speed optical interconnect.

Top Wall Street analysts have increased estimates following Acacia’s positive pre-announcements and secondary offering completed last week. Acacia continues to benefit from strong demand across Web 2.0 direct customers, Chinese original equipment manufacturers and metro 100G cycles. Acacia additionally is benefiting from strength in China broadband optical roll-outs.

The Deutsche Bank price target for the stock is a stunning $125, and the Wall Street consensus target is lower at $119. The shares closed Friday at $84.79.

Akamai Technologies

This company posted solid inline second-quarter numbers, but the guidance stunned Wall Street. Akamai Technologies Inc. (NASDAQ: AKAM) is the self-described global leader in content delivery network (CDN) services, Akamai makes the internet fast, reliable and secure for its customers. The company’s advanced web performance, mobile performance, cloud...


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