In this article, we discuss 10 best data storage stocks to buy now. If you want to skip our detailed analysis of the data storage industry, head directly to 5 Best Data Storage Stocks To Buy Now.
Fortune Business Insights predicts that the worldwide data storage market will experience substantial growth, increasing from $247.32 billion in 2023 to $777.98 billion by 2030. This growth is expected to occur at a compound annual growth rate (CAGR) of 17.8% throughout the forecast period. The growing adoption of artificial intelligence and machine learning, cloud-based services, and data analytics is fueling the growth of the data storage market. This year, industry experts forecast a spike in the adoption of object storage. To maintain a competitive edge, businesses are likely to reassess storage tiering and cloud solutions, aiming to trim their environmental footprint by adopting more compact and energy-efficient options. Additionally, automation is expected to grow as organizations strive to attain their sustainability and efficiency objectives. According to Brent Ellis, a senior analyst at Forrester Research:
“Object storage pairs very well with cloud-native application development, because you don’t actually need a storage driver to address it. You can just address an S3 bucket directly, which means you can span multiple locations in very interesting ways.”
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Object storage stores and manages data as discrete, self-contained units, and unlike traditional file or block storage, object storage provides unlimited scalability. Rick Vanover, a senior director at backup vendor Veeam, explained the benefits of object storage:
“Companies have a lot of data they really care about, and object storage has a lot of features that really help protect it, like immutability and archive storage classes. It provides a great combination of security capabilities and tiering and managing the lifecycle so organizations can have great cost/performance and security.”
The cloud storage market is undergoing big moves. For example, Alibaba Group Holding Limited (NYSE:BABA)’s plan to split its cloud unit into a standalone entity has raised concerns about its long-term prospects due to higher regulatory scrutiny and extensive competition. Analysts suggest that external investment and separation from Alibaba Group Holding Limited (NYSE:BABA)’s primary e-commerce business could support international expansion, particularly to compete with industry giants like Amazon Web Services. However, others speculate that the Chinese government may invest in the cloud unit or it could become a private entity, given its leadership in the domestic cloud computing industry. Such changes could also improve AliCloud’s market share in China, where growth is primarily driven by government and state-owned enterprises that have been slower to make the shift to cloud services.
On the other hand, Amazon.com, Inc. (NASDAQ:AMZN)’s cloud computing division announced in May 2023 that it will invest $13 billion in India by the end of this decade, as it is one of Asia’s quickest growing economies. Amazon.com, Inc. (NASDAQ:AMZN)’s decision aligns with India’s plans to attract larger investments in the digital sector to meet the growing demand for data storage and services from corporations and government entities.
To benefit from the advancements and growth potential in the data storage industry, investors can pick up stocks like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG). While Apple Inc. (NASDAQ:AAPL) also provides cloud-based storage through iCloud, we did not include the stock on our list since it is primarily compatible with Apple devices only.
Our Methodology
We selected the following data storage stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best Data Storage Stocks to Buy Now
10. Pure Storage, Inc. (NYSE:PSTG)
Number of Hedge Fund Holders: 41
Pure Storage, Inc. (NYSE:PSTG) is a California-based provider of data storage technologies, products, and services. On May 31, Pure Storage, Inc. (NYSE:PSTG) reported GAAP earnings per share of -$0.22, beating market consensus by $0.02. The revenue of $589.31 million also outperformed Wall Street estimates by $30 million. The company announced a year-over-year increase of approximately 30% in revenue from subscription services as well as in the annual recurring revenue (ARR) generated by subscriptions.
According to Insider Monkey’s first quarter database, 41 hedge funds were bullish on Pure Storage, Inc. (NYSE:PSTG), compared to 39 funds in the last quarter. Gavin Baker’s Atreides Management is the largest stakeholder of the company, with 7.26 million shares worth $185.2 million.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), Pure Storage, Inc. (NYSE:PSTG) is one of the best data storage stocks to invest in.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 49
International Business Machines Corporation (NYSE:IBM) is an American multinational technology corporation that provides on-premises and cloud-based server and storage solutions. It is one of the best data storage stocks to invest in. On June 26,International Business Machines Corporation (NYSE:IBM) reached an agreement to purchase Apptio, an enterprise software company, from Vista Equity Partners for $4.6 billion. The deal is anticipated to be finalized in the second half of 2023. By combining Apptio’s offerings with IBM’s IT automation software and Watson AI platform, clients will have access to a comprehensive solution for optimizing all their technology interests.
According to Insider Monkey’s first quarter database, 49 hedge funds were bullish on International Business Machines Corporation (NYSE:IBM), compared to 43 funds in the earlier quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is the largest stakeholder of the company, with 680,290 shares worth $89 million.
Diamond Hill Long-Short Fund made the following comment about International Business Machines Corporation (NYSE:IBM) in its Q4 2022 investor letter:
“New positions initiated in Q4 included shorts International Business Machines Corporation (NYSE:IBM), Acushnet Holdings (GOLF) and elf Beauty (ELF). Since diversified information technology company IBM’s 2019 acquisition of Red Hat, the company has aggressively pursued a hybrid cloud strategy. Though IBM and its new management team have made solid progress on this pivot, we believe the company still meaningfully lags the cloud hyperscalers and other cloud-native companies. Management has also laid out aggressive long-term targets for revenue growth and free cash flow, both of which we believe the company will struggle to achieve as it faces intense competition in its hybrid cloud business and structural headwinds in the company’s legacy businesses.”
8. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 64
Datadog, Inc. (NASDAQ:DDOG), a data analytics and systems monitoring company, is one of the best storage stocks to invest in. With Datadog, Inc. (NASDAQ:DDOG)’s storage solutions, users can securely store and manage large volumes of data generated by their applications, systems, and infrastructure. On May 4, the company reported a Q1 non-GAAP EPS of $0.28 and a revenue of $482 million, outperforming Wall Street estimates by $0.04 and $12.99 million, respectively.
According to Insider Monkey’s first quarter database, 64 hedge funds held stakes worth approximately $1.9 billion in Datadog, Inc. (NASDAQ:DDOG), compared to 63 funds in the prior quarter worth $1.4 billion. Chase Coleman’s Tiger Global Management is a significant position holder in the company, with 2.6 million shares worth $192 million.
RiverPark Large Growth Fund made the following comment about Datadog, Inc. (NASDAQ:DDOG) in its Q1 2023 investor letter:
“Datadog, Inc. (NASDAQ:DDOG): DDOG was a top detractor in the quarter. The company reported strong 4Q results including 44% revenue growth and 30% earnings growth but gave cautious revenue guidance for 2023. Macroeconomic headwinds have caused clients to slow the transition of workloads to the cloud and instead to optimize current capacity. Despite this temporary slowdown, DDOG still expects revenue to grow nearly 25% in 2023.
As businesses have transitioned to cloud software infrastructure, much of which is in isolated data silos, it has become increasingly difficult for data engineers to monitor and analyze system performance. Datadog provides a SaaS software platform to monitor and analyze the system performance of software applications and IT infrastructure by giving users a single page view to observe their company’s technology stack. The company has quickly grown its revenue from $100 million in 2017 to $1.7 billion in 2022 and, we believe, should continue to grow revenue at more than 20% annually as it penetrates its $40 billion and fast-growing market. Less than 10% of software applications are currently monitored. The company’s dollar-based net retention rate has been 130%+ as existing customers continue to use an increasing number of products and the company continues to add new features. As of 4Q22, 81% of customers used 2+ products, while only 18% of customers used 6+ products (up from less than 1% two years ago). As an extremely capex light software business, DDOG already has significant free-cash-flow ($350m in 2022) and free-cash-flow margins (21% in 2022).”
7. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 67
Oracle Corporation (NYSE:ORCL) is an enterprise information technology company that provides storage solutions, networking, enterprise servers, industry-specific hardware, virtualization software, operating systems, management software, and related customer services. Oracle Corporation (NYSE:ORCL) is one of the best data storage stocks to invest in. On June 12, the company declared a $0.40 per share quarterly dividend, in line with previous. The dividend is payable on July 26, to shareholders of record on July 12.
According to Insider Monkey’s first quarter database, 67 hedge funds were bullish on Oracle Corporation (NYSE:ORCL), compared to 65 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with 20.6 million shares worth $1.9 billion.
Ariel Focus Fund made the following comment about Oracle Corporation (NYSE:ORCL) in its Q1 2023 investor letter:
“Additionally, global leader in enterprise software, Oracle Corporation (NYSE:ORCL) traded higher in the quarter, driven by solid quarterly earnings, a material increase in the dividend as well as forward looking guidance that implies a substantial acceleration in organic cloud growth for full year 2023. We believe these results highlight ORCL’s ability to effectively cross-sell and upsell apps and infrastructure, as well as the emergence of the company’s cloud platform as a competitive offering.”
6. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 73
Micron Technology, Inc. (NASDAQ:MU) designs, manufactures, and commercializes memory and storage products worldwide. The company’s operations are divided into four segments – Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit. On June 28, Micron Technology, Inc. (NASDAQ:MU) declared a $0.115 per share quarterly dividend, in line with previous. The dividend is payable on July 25, to shareholders of record on July 10.
According to Insider Monkey’s first quarter database, 73 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU), compared to 74 funds in the prior quarter. Rajiv Jain’s GQG Partners is a significant position holder in the company, with 4.3 million shares worth $259 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), Micron Technology, Inc. (NASDAQ:MU) is one of the premier data storage stocks to watch.
Here is what Claret Asset Management has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2022 investor letter:
“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party’s over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”
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Disclosure: None. 10 Best Data Storage Stocks To Buy Now is originally published on Insider Monkey.
