With a former JPMorgan heavyweight now advising the Social Security Administration on technology upgrades, Washington is quietly becoming a bigger story for investors. Faster modernization of a vast benefits system could reshape how federal agencies buy and use IT, which matters for any portfolio tuned into long term themes. This article walks through three U.S. IT services stocks exposed to that news and how each might fit, or not fit, in your watchlist.

The three stocks that follow are just a starting sample, and the full screen surfaced 63 more U.S. IT services and government modernization companies with equally compelling narratives that are not covered in this article. To go straight to the source and analyze, compare, and identify your own highest conviction ideas, head into the U.S. IT Services & Government Technology Modernization Plays screener.

Parsons (PSN)

Overview: Parsons is a U.S. engineering and technology company that builds and secures critical infrastructure while providing software driven solutions for federal customers in areas such as cyber, defense, space systems, and digital modernization.

Operations: Parsons generates roughly US$3.1b from Federal Solutions and US$3.2b from Critical Infrastructure each year, with around US$4.6b of revenue coming from the United States and the balance spread mainly across North America and the Middle East.

Market Cap: US$4.9b

Parsons offers focused exposure to government technology modernization, with significant involvement in cyber, space, and complex infrastructure projects that can be affected as agencies upgrade aging systems such as those at the Social Security Administration. The company combines a large U.S. federal footprint with an infrastructure and international book that has been supported by sizeable contract wins in areas such as ISR, space, and air base defense. At the same time, heavy reliance on government budgets, higher debt, and earnings pressure over the past year mean results can be uneven if projects are delayed or lost. For investors interested in federal digital transformation, Parsons is a company that may warrant closer research.

Parsons operates at the intersection of federal tech modernization and complex infrastructure, yet the real story may be how its contract wins and debt profile interact. Get the fuller picture in the 3 key rewards and 3 important warning signs

Build your own federal tech modernization shortlist

Parsons and the two other stocks in this article all came out of a single Simply Wall St screen, but the real edge is in shaping filters around what matters most to you. Use our flexible Screener to mix metrics like valuation, growth, balance sheet strength, and risks, or start with any of our curated Investing Ideas for ready made shortlists.

Hewlett Packard Enterprise (HPE)

Overview: Hewlett Packard Enterprise is a global IT company that provides servers, storage, networking and hybrid cloud services, including its GreenLake platform, to help large enterprises and public sector agencies run data centers, adopt AI workloads and modernize legacy systems.

Operations: HPE generates about US$10.1b from Networking, US$0.8b from Corporate Investments and Other, and reports a segment adjustment of roughly US$27.9b, with revenue spread across the United States, Europe, the Middle East, Africa, Asia Pacific, Japan and the rest of the Americas.

Market Cap: US$70.0b

Hewlett Packard Enterprise gives you a way into AI ready data centers and hybrid cloud projects that many public sector clients rely on when modernizing core systems like those at the Social Security Administration. The company is focusing on higher margin areas such as AI infrastructure, networking and as a service offerings like GreenLake, which may influence how predictable its cash flows are over time. At the same time, high debt, a recent one off loss of US$836 million and heavy competition in hardware and networking raise real execution questions, especially as it integrates Juniper. If you want exposure to government and enterprise modernization with an AI focus, HPE is a story worth understanding in more depth before deciding how it fits your portfolio.

Hewlett Packard Enterprise is trying to turn AI ready infrastructure and GreenLake into steadier cash flow, yet the recent US$836m loss still raises questions. See how the full analysis report for Hewlett Packard Enterprise could change that story

Jacobs Solutions (J)

Overview: Jacobs Solutions is a Dallas based engineering and consulting company that helps government and private sector clients plan, design and run large infrastructure and advanced facilities projects, including complex programs where IT systems, data centers and digital modernization are central. Its role in public sector water, transport, energy and health projects ties it directly to government modernization efforts that look similar to what the Social Security Administration is attempting on the technology side.

Operations: Jacobs generates about US$12.9b from Infrastructure & Advanced Facilities and US$1.4b from PA Consulting, with most of its roughly US$9.3b in geographic revenue coming from the United States and the rest largely from Europe and Australia and New Zealand.

Market Cap: US$17.3b

Jacobs Solutions may appeal to investors looking for a mix of government modernization work and exposure to long dated infrastructure and AI heavy data center projects. The company reports a record backlog of about US$29b and AI data center infrastructure now accounts for around 11% of revenue. At the same time, margins have compressed to 2.5% from 4.1% and earnings declined 25.7% in the past year, so execution on profitability remains important. High debt and reliance on external funding add another layer of risk, while board independence and recent buybacks indicate management confidence in the long term plan. For investors who expect SSA style digital upgrades across agencies to gain traction, Jacobs represents one potential way to gain exposure, but only if they are comfortable with the trade off between growth and balance sheet pressure.

Jacobs Solutions is focusing on AI heavy data centers and a record US$29b backlog, yet compressed margins and high debt keep the story unfinished. See how the 2 key rewards and 3 important warning signs could reframe that balance

Seeking Fresh Alternatives Before They Fly

Some of the sharpest breakouts start quietly, then move fast once momentum hits. Scan these fresh stock ideas before they are fully caught by the crowd and act now.

• Spot robust cash generators early by reviewing a curated 48 high quality undervalued stocks that emphasises strong balance sheets and solid cash flows while they are still under the radar for now.
• Ride the AI infrastructure build out by checking a focused group of 55 AI infrastructure stocks, where data center demand and compute needs are driving fresh attention.
• Position for the next automation wave with a hand picked mix of 37 robotics and automation stocks that could benefit as robotics and factory upgrades gain momentum.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.