Artificial intelligence has been a hot topic in the tech industry, with companies like Nvidia, Alphabet, and Microsoft dominating the headlines. While these giants have been in the spotlight, there is another player in the market that is often overlooked – Motorola Solutions. This telecommunications company, as described by portfolio manager Trent Masters from Alphinity Investment Management, is a hidden gem with a focus on public safety.
The Business Model
When people think of Motorola, they often associate the name with mobile phones. However, Masters points out that the company has shifted its focus towards public safety, particularly in the area of Land Mobile Radio (LMR). This segment accounts for about 70% of Motorola’s business and involves providing communication devices for first responders. In addition to LMR, the company also offers video security and building command center solutions.
Masters is optimistic about Motorola’s future, citing the ongoing upgrade cycle in the LMR business. The introduction of new devices at higher price points is expected to drive revenue growth. Furthermore, the video security and command center units are gaining traction in the market, offering additional opportunities for expansion. With a strong emphasis on public safety and government spending, Motorola is positioned to weather economic uncertainties.
While AI is not a primary driver for Motorola, Masters sees potential for integrating artificial intelligence into the company’s solutions. One example he mentions is using AI in video security to detect potential threats like individuals carrying weapons. By leveraging AI technology, Motorola can enhance the effectiveness of its public safety offerings. Although not a pure play in AI like Nvidia or Microsoft, there are opportunities for Motorola to use AI to augment its growth.
Market Performance
On the New York Stock Exchange, Motorola’s shares have seen a significant increase, with a rise of over 18% year-to-date and over 30% in the past 12 months. Analysts covering the stock have given it positive ratings, with the majority recommending a buy or overweight position. The average price target for Motorola’s stock is $376.38, indicating some downside potential, but overall, the outlook remains favorable.
Motorola Solutions presents a compelling investment opportunity in the tech market. With a strong focus on public safety, a diverse portfolio of solutions, and potential for AI integration, the company is well-positioned for growth. As investors seek to diversify their tech holdings, Motorola stands out as a solid and reliable choice with significant upside potential.
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