Investors interested in Internet - Software stocks are likely familiar with ZoomInfo (GTM) and F5 Networks (FFIV) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimat ...

Company Overview - F5, Inc. is a significant player in multi-cloud application security and delivery, offering a range of products including NGINX and BIG-IP, along with consulting, training, and technical support [1] - The company's offerings are essential infrastructure for enterprises, governments, and service providers that require secure and uninterrupted application delivery [1] Market Position - F5 has a market capitalization of approximately $18.7 billion, categorizing it as a large-cap company, reflecting its operational stability and influence [2] - The stock has shown resilience, slipping only 3.8% from its 52-week high of $337.39, while rising 9.7% over the past three months, outperforming the S&P 500 Index's 9% gain [3] Performance Metrics - Over the past 52 weeks, F5's stock surged by 45.1%, and it has already climbed 29% in 2025 alone, compared to the S&P 500's 15.8% increase over the same period [4] - Technical indicators show that F5's stock has consistently traded above its 50-day and 200-day moving averages since mid-May, reinforcing a bullish market stance [5] Recent Developments - On September 12, F5's stock experienced a nearly 3.9% drop after reaching an all-time high of $337.39, attributed to the announcement of a $180 million cash acquisition of CalypsoAI, a startup focused on AI security [6] - The acquisition aims to enhance F5's AI threat protection capabilities, although it has raised concerns among investors regarding near-term cash outflow and integration risks, leading to a short-term selloff [7]

Company Overview - F5, Inc. is based in Seattle and specializes in keeping important applications and online services safe, fast, and always available [1] - The company's products are positioned in front of applications and APIs to provide protection [1] Investment Focus - The analysis primarily targets small- to mid-cap companies, which are often overlooked by many investors, while also occasionally reviewing large-cap companies for a broader market perspective [1]

Core Viewpoint - F5 Inc. is recognized as a trending AI stock, with a recent acquisition of CalypsoAI viewed positively, enhancing its advanced security solutions suite [1][2]. Group 1: Acquisition Details - The acquisition of CalypsoAI is seen as a strategic move that aligns with F5's focus on security, following previous acquisitions of Mantis Networks, Insight Engines, and LeakSignal [2]. - The transaction value for CalypsoAI is modest compared to past acquisitions, such as Shape Security for approximately $1.02 billion and NGINX for $670 million [2]. - F5 has sufficient cash flow to complete the acquisition while continuing stock buybacks, indicating financial stability [2]. Group 2: Market Position and Future Outlook - Although the acquisition is expected to have an immaterial impact on revenue and operating results, it is believed to enhance F5's security platform, making it more attractive to organizations implementing Generative AI and Large Language Model initiatives [2]. - F5 Inc. operates as a multi-cloud application delivery and security solutions provider, offering networking, unified app management, and security solutions [3].

Industry Overview - The global big data market is projected to grow from $199.63 billion in 2024 to $573.47 billion by 2033, with a CAGR of 12.44% [2] - The big data analytics market is expected to increase from $277.14 billion in 2024 to $1,045.26 billion by 2033, at a CAGR of 13.7% [3] Company Highlights NVIDIA Corp. (NVDA) - NVIDIA reported strong second-quarter fiscal 2026 earnings, with quarterly sales expected to reach $54 billion, +/- 2% [8] - The company anticipates that resuming H20 chip sales in China could add $2 to $5 billion in the third quarter [8] - NVIDIA's revenue and earnings growth rates are expected to be 56.3% and 48.5%, respectively, for the current year [12] Palantir Technologies Inc. (PLTR) - Palantir's second-quarter earnings surpassed $1 billion for the first time, driven by its AI-powered data mining and analytics [13] - The company has increased its full-year revenue guidance to between $4.142 billion and $4.150 billion [16] - Expected revenue and earnings growth rates for Palantir are 45.6% and 58.5%, respectively, for the current year [16] Microsoft Corp. (MSFT) - Microsoft has capitalized on AI business momentum, with strong demand for Office 365 and Azure cloud services [17][18] - Azure achieved over $75 billion in annual revenues with a growth rate of 34% [20] - Expected revenue and earnings growth rates for Microsoft are 14% and 12.5%, respectively, for the current year [21] International Business Machines Corp. (IBM) - IBM is experiencing healthy demand for hybrid cloud and AI solutions, bolstered by its acquisition of Hakkoda [23] - The company’s expected revenue and earnings growth rates are 6.4% and 7.7%, respectively, for the current year [26] F5 Inc. (FFIV) - F5 is benefiting from strong software growth and increasing demand for application security in multi-cloud environments [27] - The company has made six acquisitions over the past five years to enhance its security capabilities [28] - Expected revenue and earnings growth rates for F5 are 3.9% and 4%, respectively, for the next year [30]

Core Viewpoint - Seattle-based security and application delivery giant F5 will acquire CalypsoAI for $180 million, enhancing its capabilities in AI-driven security solutions [1] Company Summary - F5 is a prominent player in the security and application delivery industry, focusing on providing advanced security solutions [1] - CalypsoAI, founded in 2018, specializes in AI technologies, which will complement F5's existing offerings [1] Financial Summary - The acquisition deal is valued at $180 million, indicating F5's commitment to expanding its portfolio in the AI sector [1]

Group 1 - F5, Inc. has experienced a strong upward trend, gaining 6.5% over the past six trading days, adding approximately $1.2 billion to its market capitalization, now valued at around $19 billion [2] - The stock's year-to-date return is 29.9%, significantly outperforming the S&P 500's gain of 11.1% during the same period [2] - F5 participated in the Goldman Sachs Communacopia + Technology Conference, outlining its strategy for addressing challenges in hybrid and multi-cloud environments [3] Group 2 - F5 provides multi-cloud application security and delivery solutions, along with professional services for large enterprises to ensure the performance, availability, and protection of their network applications [4] - The recent strong performance of F5's stock raises questions for investors about whether to buy more or secure their gains [4] - A multi-day advance in stock price can reflect rising investor confidence, potentially leading to follow-on buying [6]

Core Insights - F5 is participating in the Goldman Sachs Communacopia and Technology Conference, showcasing its leadership through CEO Francois Locoh-Donou and CFO Cooper Werner [1][2] Group 1 - The presentation is hosted by Michael Ng, a research analyst covering F5 and IT Hardware and Networking at Goldman Sachs [2] - The session is scheduled for approximately 35 minutes, including time for investor Q&A [2]

Summary of F5 Conference Call Company Overview - **Company**: F5 (NasdaqGS: FFIV) - **Industry**: Application Delivery and Security Key Points and Arguments Industry Challenges and F5's Position - **Hybrid Multi-Cloud Complexity**: Large enterprises are adopting hybrid multi-cloud architectures, leading to complexities in securing and delivering applications across different environments [7][10] - **Increased Application Services**: The number of application services required has significantly increased, necessitating advanced security measures such as API security and bot attack protection [7][8] - **AI Proliferation**: The rapid growth of AI applications adds further complexity, requiring new security services [8][10] ADC Market Insights - **ADC Role**: Application Delivery Controllers (ADCs) are essential for deep traffic inspection and are evolving beyond traditional roles to include security functions [12][13] - **Market Share Growth**: F5 has gained 16% market share in the ADC market over the past five years due to strategic investments across hardware, software, and SaaS [15][18] Competitive Landscape - **Strategic Choices**: F5's decision to invest in all ADC form factors contrasts with competitors who have focused on specific categories, allowing F5 to offer a comprehensive solution [18][22] - **Customer Consolidation**: Customers are consolidating their spending on F5 due to its broad portfolio and competitive advantages [19][20] Refresh Cycle and Non-Refresh Demand - **Legacy Systems**: Over 50% of F5's installed base is on older systems, with a refresh cycle expected as end-of-software support approaches [24][27] - **Capacity Expansion**: Customers are increasingly investing in capacity expansion during refresh cycles, driven by data sovereignty and AI considerations [27][31] Software Revenue Dynamics - **Growth Outlook**: F5 anticipates mid-single-digit growth in software revenue for fiscal 2026, driven by a strong base and expansion opportunities [33][36] - **Subscription Model Success**: The flexible consumption program has facilitated customer expansion and reduced friction in the purchasing process [35][36] Security Capabilities - **Security Integration**: Security now represents about 41% of F5's revenue, with a focus on application and API protection, zero trust access, and AI security [45][46] - **AI Security Solutions**: F5 is developing solutions like the F5 AI Gateway to secure connections between AI applications and data stores [46][47] Financial Performance and Guidance - **Revenue Growth**: F5 is guiding for 9% revenue growth, up from an initial outlook of 4-5%, driven by strong performance in both software and systems [48][50] - **Margin Improvement**: Operating margins are targeted at 35%, with a focus on driving efficiencies while investing in new use cases [52][53] Future Priorities - **Application Delivery and Security Platform**: F5's primary focus is on integrating its product families into a single platform to simplify customer operations [55] - **AI Opportunities**: F5 sees potential in AI data delivery and security, although these markets are still in early stages [56] Additional Important Insights - **Customer Transition**: Transitioning ADC vendors is complex and often takes years, providing F5 with long-term revenue opportunities as customers adopt its solutions [39][40] - **Cross-Selling Potential**: F5's entry into customer estates often leads to significant cross-sell opportunities as customers discover the breadth of its offerings [41][42]

Summary of Key Points from the Conference Call Industry Overview - The conference focuses on the Hardware sector, particularly in the context of AI infrastructure and its impact on data center equipment spending. The demand for AI-related data center equipment is expected to increase significantly, with a projected 54% year-over-year growth in capital expenditures (capex) among the top six cloud providers, reaching $388 billion in 2025 [7][8][10]. Company Insights HP Inc. - HP Inc. is projected to generate $55.1 billion in revenue for fiscal year 2025, reflecting a 3% year-over-year increase. The revenue breakdown is expected to be approximately 70% from the Personal Systems Group and 30% from Printing [29][30]. - The company reported mixed earnings for Q3 2025, with strong PC demand driven by a refresh cycle, but weakness in hardware unit demand and pricing in the Printing segment. This led to a lowered EPS outlook for fiscal year 2025 [30][33]. - Personal Systems demand is bolstered by the Windows 11 refresh and AI PC adoption, with overall PC unit shipments up 5% year-over-year. The company anticipates continued growth in Personal Systems, expecting a 6% year-over-year increase in fiscal Q4 2025 [30][33]. Other Companies - The conference will feature discussions with various companies, including F5, Ingram Micro, NetApp, Axon Enterprise, and Arista Networks, focusing on their respective positions in the hardware and communications technology sectors [4][6]. Key Industry Themes 1. **AI Infrastructure Demand**: The demand for AI infrastructure is expected to grow faster in tier 2 cloud and enterprise sectors compared to hyperscalers, with projected growth rates of 58% and 48% respectively from 2024 to 2028 [12]. 2. **Traditional IT Equipment Recovery**: Traditional enterprise IT equipment is in the early stages of recovery, with server revenue growing by 15% year-over-year in Q1 2025. However, growth is primarily driven by higher average selling prices (ASPs) rather than unit growth [13]. 3. **PC Market Dynamics**: The global PC market is expected to grow by 4% year-over-year in 2025, driven by a refresh cycle and the end of Windows 10 support. HP expects industry unit growth in the second half of 2025 and into 2026 [27][38]. Financial Projections and Risks - HP's financial outlook includes a free cash flow (FCF) of approximately $2.8 billion for fiscal year 2025, with a target to return 100% of FCF to shareholders through dividends and buybacks [29][38]. - Key risks for HP include potential decreases in commercial PC demand due to hybrid work trends, pricing pressures from high channel inventory, and competition in the printing market [36][38]. Management Questions - Questions for management include inquiries about the outlook for PC unit demand, the pace of Windows 11 adoption, and expectations for the commercial print business [37]. This summary encapsulates the critical insights and projections discussed during the conference, highlighting the trends and challenges within the hardware sector, particularly for HP Inc. and its peers.