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2 Great Tech Stocks to Buy If the Stock Market Crashes
KDKyndryl (KD) The Motley Fool·2025-03-19 09:45

Market Overview - The stock market is experiencing volatility due to concerns over tariffs, trade wars, inflation, and a potential recession, leading to a decline in investor sentiment [1] - The bull run that began after the pandemic is potentially coming to an end as economic realities set in [1] Investment Opportunities - Investors are encouraged to prepare for potential buying opportunities in high-quality stocks as prices may tumble [2] - Cloudflare (NET) and Kyndryl (KD) are highlighted as attractive long-term investment options [2] Cloudflare Insights - Cloudflare's stock has decreased approximately 35% from its peak earlier this year due to market uncertainties [3] - Despite the decline, Cloudflare's price-to-earnings ratio remains high at 140 based on fiscal 2025 estimates, indicating it is still considered an expensive stock [3] - The company has a robust edge computing network across over 335 cities, providing significant growth potential [4] - Cloudflare's total addressable market is projected to reach 222billionby2027,drivenbytheexpansionofitsproductofferings,includingAIservices[4]−Thecompanyaimstodeliverfastandcost−effectiveAIinference,integratingitsAIplatformwithserverlesscomputingservices[5]−Ifpricedappropriately,Cloudflarestockcouldrepresentastronglong−terminvestmentopportunity[6]KyndrylInsights−Kyndryl,anITservicesproviderspunoutofIBM,istransitioningfromlower−marginlegacycontractstohigher−marginopportunities,withsignificantimprovementsexpectedinitsfinancialperformance[7]−Byfiscal2025,Kyndrylanticipatesthatabout50222 billion by 2027, driven by the expansion of its product offerings, including AI services [4] - The company aims to deliver fast and cost-effective AI inference, integrating its AI platform with serverless computing services [5] - If priced appropriately, Cloudflare stock could represent a strong long-term investment opportunity [6] Kyndryl Insights - Kyndryl, an IT services provider spun out of IBM, is transitioning from lower-margin legacy contracts to higher-margin opportunities, with significant improvements expected in its financial performance [7] - By fiscal 2025, Kyndryl anticipates that about 50% of its revenue will come from higher-margin deals, increasing to over 90% by fiscal 2028 [8] - The company expects to more than double its pre-tax profit and triple its adjusted free cash flow over the next three years, with a projected 1 billion in free cash flow by fiscal 2028 [9] - Kyndryl's current market capitalization of $8 billion is viewed as undervalued given its growth potential [9] - The company operates in a highly competitive industry sensitive to economic conditions, which may impact its profit and cash flow plans [10] - Despite current economic uncertainties, Kyndryl is positioned for long-term success with a focus on high-margin contracts, making it a company to watch [11]