By Tim Beyers, The Motley Fool
Tech stocks may be crashing, but tech spending is on track to rise 3% to $3.6 trillion this year, according to new data compiled by Gartner, a technology research firm.
While the overall gain -- just 3% -- is paltry compared to rising healthcare spending, a closer look at the numbers reveals at least one pocket of strength: cloud computing services.
Organizations are on track to spend more than $109 billion on cloud computing, up 20% over last year. And that's not all. Gartner says the total outlay for cloud services could nearly double, to $207 billion, by 2016. Install-and-upgrade software and infrastructure is becoming less popular by the day, it seems.
Yet there's also troubling news in the numbers. Spending on telecommunications services will rise just 1.4%, Gartner estimates, to $1.69 trillion. That's a big number, I realize, but investors are rightly focused on the growth rate. Slower spending in this sector has battered the shares of infrastructure suppliers such as Acme Packet (NAS:APKT) and Riverbed Technology (NAS: RVBD) .
Both stocks are down more than 40% year-to-date versus a 10% gain for the Nasdaq Composite. Acme Packet, in particular, preannounced yet another earnings miss last week, as the company continues to work through problems selling to domestic carriers that supply the majority of its revenue.
Three things you can do right now
We know to be careful investing in telecom. But how should investors react to increased spending on cloud services? I'd suggest betting on the top services in their respective niches, which aren't dependent on the goodwill of others in order to win business. Here are three I like right now:
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