IT Services A 'Dead Sector'

Notable Wall Street analyst Trip Chowdhry went straight to the point in a research report on Tuesday: The Information Technology (IT) sector "will be a dead sector" in 2017.

According to Chowdhry, IT companies will suffer from a lack of revenue catalysts and continued industry challengers throughout 2017. The analyst singled out several companies, including Infosys Ltd ADR (NYSE: INFY), Cognizant Technology Solutions Corp (NASDAQ: CTSH), Accenture Plc (NYSE: ACN) and Wipro Limited (ADR) (NYSE: WIT), each of which will see their stocks trade sideways to down as upward movement is "impossible."

Chowdhry expanded on Accenture, noting that President-elect Donald Trump is "going to come [down] hard" on the company, which moved its headquarters to Ireland for tax reasons in 2009. Moreover, contracts with the federal government will be handed out to American-based companies, and investors should avoid the stock for the time being — unless its headquarters is moved back to the United States.

Zero-Sum Industry

Chowdhry continued that the IT industry could be seen as a zero-sum game, as there are no more large deals left. This may last until IT services companies exit the industry, which opens up the possibility for IT vendors to win already existing contracts.

Finally, the analyst noted that SuperClouds such as Amazon.com, Inc. (NASDAQ: AMZN)'s AWS and Microsoft Corporation (NASDAQ: MSFT)'s Azure will continue to threaten almost every enterprise vendor, and the struggles will merely increase for nearly every IT services company in 2017.