Internet infrastructure stocks are diverse. They include companies that merchandise software and hardware that affect internet use.
Most did well last year, with an average 28% rise. This is better than the growth of the S&P 500, which went up 27% last year.
2022 seems like it’ll be a strong year too, and for a few reasons, including:
- Increased need for cloud computer services
- Major public cloud and internet companies requiring capacity expansions
- Easing supply chains
With that, many stocks poised to rise are traded at under-market multiples, including:
The company sells network products. Those include switches, routers, and network management software.
Juniper has been one of the strongest market performers last year – rising by over 45% in the past 12 months.
But what about failing companies?
One is Lumentum Holdings, known for optic network products. The company isn’t falling in a true sense, though its growth isn’t outstanding.
Its stock hasn’t seen much traction, only gaining 2% in the last 12 months.
A Sharp Rise Compared to Past Months
Juniper’s rise has been consistent as far back as November last year. Back then, the stock had risen by 45% throughout the year prior.
Lumentum didn’t change that much too, with a 3% rise during that timeframe.
Don’t Forget the Infra Bill
Just a few weeks ago, President Biden signed an infrastructure bill set to affect the entire US.
That bill includes funding for internet (specifically broadband) use. The bill allocates $65 billion to underserved areas of the country.
Also, up to $43 billion in grants will go towards network infrastructure.
This is a massive boost for the internet infrastructure industry. It means the government is essentially a major buyer for the next year.
And with better infrastructure, this will allow internet infrastructure companies a wider market to unserved locations.
Add to that the recent shift of workplaces (due to the pandemic). Many people now opt for a “work from home” lifestyle, which increased the demand for better internet infrastructure and products.
With a new strain of the virus underway, the work-from-home trend is likely to continue.
What Kind of Companies Stand to Benefit?
Companies that offer wireless services and equipment top that list.
Next comes cyber security. With an increased number of internet users working at home, more at-home computer security is required.
5G companies are another winner. We expect competition to be high for faster and low maintenance internet services.