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Blockchain and artificial intelligence are two of the hottest trends in a white-hot technology sector heading into 2018. The trends have created major long-term growth opportunities in the IT Services group, and KeyBanc analyst Arvind Ramnani has created a portfolio of five stocks that could stand to benefit most.
According to Ramnani, the complexities of blockchain and AI technology will create major demand for consulting and advisory companies. Ramnani said technology has become a competitive differentiator for all companies, not just technology companies.
“This has resulted in greater demand for IT Services companies with in-depth consulting and advisory skills that are domain-specific and include expertise in new technology such as digital and post-mobile,” he said in a note.
Ramnani even said blockchain could help drive AI development.
“Blockchain has the potential to rearrange core operations across multiple industries and introduce significant levels of efficiency, trust, and transparency across highly intensive workstreams,” he said.
Ramnani said the disruptive potential of blockchain technology could make the biggest splash in broker relationships, supply chains, and asset transfers.
KeyBanc named the following five Overweight-rated stocks among its top picks heading into what is sees as a blockbuster year in the space:
- Accenture Plc ACN 0.33%, price target $172;
- Cognizant Technology Solutions Corp CTSH 0.12%, price target $86;
- DXC Technology Company DXC 1.07%, price target $116;
- EPAM Systems Inc EPAM 0.36%, price target $123; and
- Luxoft Holdings Inc LXFT 1.79%, price target $66.
Each of KeyBanc’s top IT Services stock picks of 2017 outperformed the S&P 500 by a wide margin, with three of the four more than doubling the overall market’s return.