Big Data software giant Splunk (NASDAQ:SPLK) was once one of Wall Street’s favorite hypergrowth companies. Then Covid-19 struck. Enterprises stopped spending a lot of money on data analytics software. Splunk’s hypergrowth trajectory flattened out. Revenue growth rates have gone negative in 2020. And, as all that has happened, SPLK stock has hit a brick wall.

SPLK stock rose 61% in 2017, another 27% in 2018, and then another 43% in 2019. But, in 2020, SPLK stock is up just 3%.

In other words, the pandemic has entirely flipped Splunk upside down. Once upon a time, this was a hypergrowth company with a red-hot stock. Now, it’s a negative growth company with a sluggish stock.

But the Covid-19 crisis is an ephemeral headwind. It will eventually and inevitably pass. When it does, enterprise spending on data analytics software will rebound, and Splunk will flip right-side up again. That is, come 2021/22, Splunk will once again be a hypergrowth company with a red-hot stock.

To that end, long-term investors should get bullish on SPLK stock here, while it’s still languishing on near-term fears that won’t last.

Here’s a deeper look.

The Intelligence Economy Revolution

Forgetting Covid-19 noise and recent numbers for a second, the long-term, big-picture outlook on Splunk strongly implies that SPLK stock is a long-term winner.

Here’s the story.

We are sprinting into the Intelligence Economy — a new era wherein companies and persons become smarter with the help of data, AI and algorithms. This future is inevitable, because (somewhat obviously) AI-powered and data-driven decision making leads to better outcomes. A 2020 Forrester Consulting Survey found that data-driven organizations are 58% more likely to beat revenue goals than their non-data counterparts.

By consequence, the Intelligence Economy will one day be ubiquitous. Yet, only 31% of companies today consider themselves data-driven, while 92% of companies are increasing their pace of investment in AI and big data.

Thus, the stage is set for explosive growth in the Intelligence Economy over the next 5 to 10 years.

Splunk is at the epicenter of this revolution.

Splunk Is a Long-Term Winner

Through its Data-to-Everything platform, Splunk offers various services and tools which enable enterprises to seamlessly capture, aggregate, monitor, and analyze data from various sources, with an endless number of end-applications, including security, consumer experience, product development, marketing, etc.

Gradually, Splunk’s big data tools are morphing into a “must-have” for enterprises in today’s increasingly data-driven world. Long story short, there’s a ton of data out there and all that data contains a ton of valuable information that can improve processes across every major enterprise vertical.

Extracting all that information from all that data used to be a luxury. Now, it’s a necessity for the enterprise, because if a company doesn’t do it, they will be left behind on every single front.

So, over the next several years, demand for Splunk’s big data services will broaden out to encompass almost every enterprise out there. At the same time, current customers will up their spend on Splunk, because the volume of data these customers are generating is growing exponentially with the rapid proliferation of data-collecting smart devices and apps.

Net net, over the next five to ten years, Splunk will turn into a necessary big data analytics tool for enterprises, on which enterprises will spend a ton of money to extract all the information they can from all the data they have.

Ultimately, these secular trends imply that Splunk will stay on a huge growth trajectory for a lot longer — which, of course, is great news for SPLK stock.

Covid-19 Crisis Will Abate

Splunk’s hypergrowth trajectory has no doubt been dramatically disrupted by the Covid-19 pandemic.

Before the pandemic, this was a 30%-plus revenue growth company with rapidly expanding gross and operating margins. Now, it’s a negative revenue growth company with falling gross and operating margins.

What’s happening under the hood?

The pandemic has dramatically slowed economic activity, and forced businesses to lean-up their spending. Thus, companies that have yet to adopt to data analytics software like Splunk, are putting off adoption until 2021/22. Meanwhile, companies that already have data analytics software like Splunk, are reducing spend in an effort to conserve cash.

The result is a very difficult operating environment for Splunk wherein the company isn’t adding that many new customers and old customers aren’t spending as much.

But Covid-19 isn’t here to stay forever. We have highly effective vaccines in the pipeline that are already being distributed across the globe. By mid-to-late 2021, the world will be ready to put most of the Covid-19 crisis in the rearview mirror.

As it does, economic activity will quickly normalize on the back of seemingly infinite stimulus and support from the world’s central banks. Enterprise spending budgets will re-expand. All those companies that put off adoption of new data analytics software in 2020, will rush to do so in 2021/22, while all those companies that reduced data analytics software spend in 2020, will rapidly re-up spend in 2021/22.

Connecting the dots, Splunk will get back into hypergrowth mode over the next 12 months — and stay there for the foreseeable future.

SPLK stock sunk when Splunk went from hypergrowth to negative growth in 2020. Similarly, SPLK stock will soar as Splunk goes from negative growth back to hypergrowth in 2021/22.

Bottom Line on SPLK Stock

Splunk is a long-term winner whose growth trajectory has been disrupted by the Covid-19 pandemic. As the effects of the pandemic on enterprise spending wear off over the next few quarters, though, Splunk’s growth trajectory will normalize back into hypergrowth territory.

As that happens, SPLK stock will once again turn into a big-time Wall Street winner.