3 Stocks to Consider From Flourishing Networking Industry

Industry Overview - The Zacks Computer - Networking industry is experiencing growth driven by increased focus on cloud computing, network security, big data, and cloud storage, particularly amid the rapid proliferation of AI technology [1] - Companies in this sector are capitalizing on the multi-billion-dollar AI infrastructure opportunity, with the accelerated deployment of 5G enhancing the demand for solid networking infrastructure [1][4] - The industry comprises firms that provide networking and Internet-connected products, including wireless, Ethernet, and powerline solutions, with a focus on dependability and ease of use [2] Trends Influencing the Industry - The rise of smart home and Internet-connected products is driving innovation in networking technologies, with a growing demand for efficient network support infrastructure fueled by the proliferation of IoT and cloud computing [3] - The rapid deployment of 5G is creating opportunities for network-intensive applications, necessitating substantial investments in infrastructure upgrades to support data services [4] - The upcoming Wi-Fi 7 upgrade cycle is expected to drive momentum in the industry, addressing spectrum shortage issues and supporting a higher number of connected devices [5] Economic Conditions - Global macroeconomic weakness and volatile supply-chain dynamics are persistent concerns for the industry, with inflation potentially affecting spending across small and medium-sized businesses [6] Industry Performance - The Zacks Computer - Networking industry is ranked 47, placing it in the top 19% of over 250 Zacks industries, indicating bright near-term prospects [7][8] - The industry's aggregate earnings outlook is positive, with 2024 earnings estimates improving to $2.70 from$2.68 as of July 31, 2024 [9] Stock Market Performance - The industry has underperformed the S&P 500 and the broader Zacks Computer and Technology sector over the past year, gaining 18.2% compared to the sector's 36.3% and the S&P 500's 29.4% [11] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 19.38X, below the S&P 500's 22.71X and the sector's 27.55X [13] Company Highlights - NetScout Systems (NTCT): Focused on performance management and cybersecurity solutions, with expected revenues of $800-$830 million for fiscal 2025 and a Zacks Rank 1 (Strong Buy) [14][15][16] - Intrusion Inc. (INTZ): A cybersecurity company with a strong uptake of its Intrusion Shield technology, reporting a 2.5% year-over-year revenue increase to $1.5 million in Q3 2024 [18][19][21] - **Extreme Networks (EXTR)**: Provides AI-driven cloud networking solutions, with a 23$273-$283 million for Q2 fiscal 2025 [23][24]