In this article, we will look at the 10 best edge computing stocks to buy.
Edge computing is a rapidly evolving technology that is transforming the way businesses are run and how data is stored, processed and analyzed. Edge computing is a form of distributed computing that involves processing data close to the source, instead of in the cloud or in a traditional data center. It is becoming increasingly popular as more businesses move to cloud-native solutions and as the Internet of Things (IoT) becomes more pervasive.
The edge computing industry is being shaped by several trends. With the rise of IoT and the increasing need for greater data processing and analytics, the demand for edge computing is growing. This is driving companies to adopt edge solutions to better manage their data, reduce latency, and improve overall user experience. With the rising demand for edge computing solutions, investors are pouring money into the space. This is driving innovation and competition, as well as the development of new solutions and technologies. Edge computing use cases are expanding as businesses look for new ways to leverage the technology. From smart cities and manufacturing to healthcare and autonomous vehicles, the use cases are becoming more diverse and complex. With these secular growth trends, it does not come as a surprise that the edge computing industry is on track to be worth more than $150 billion by the end of this decade.
The Global Edge Computing Industry: An Analysis
According to a report by Grand View Research, the global edge computing industry was worth $7.43 billion in 2021. The industry is expected to attain a value of $11.24 billion by the end of 2022, and grow at a compound annual growth rate of 38.9% from 2022 through 2030, reaching a value of $155.90 billion at the end of the forecasted period.
Component-wise, the hardware segment is expected to hold the dominant revenue share over the forecasted period. In 2021, the hardware segment accounted for over 40% of the global revenue. The rising popularity of IoT and Industrial IoT, IIoT, is causing a surge in the volume of data being generated. Corporations are shifting towards adopting edge computing solutions in order to reduce costs and optimize workflows.
Moreover, application-wise, the IIoT segment accounted for over 28% of the global revenue in 2021. Driven by industry 4.0 trends, the IIoT segment is expected to hold the dominant share over the forecasted period.
Finally, region-wise, North America held the dominant share in 2021 and accounted for over 40% of the industry’s revenue. This is due to the integration of edge computing solutions in IIoT. The Europe and APAC regions also accounted for a significant chunk of the global industry revenue in 2021, and are expected to grow their share further through the forecasted period.
Some of the top companies leading the global edge computing industry include Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN). We have compiled a list of the best edge computing stocks to buy now for investors that are looking to capitalize on the growth of the global edge computing market.
Copyright: ralwel / 123RF Stock Photo
Our Methodology
We studied industry analysis reports published by credible market research agencies to determine the edge computing market leaders. We narrowed down our selection to stocks that had positive market sentiment, strong market positions, and promising product pipelines. We have ranked these stocks according to their popularity among elite money managers. Along with each stock, we have mentioned analyst ratings, the hedge fund sentiment, and details about their company’s product offerings.
Edge Computing Market Leaders and Best Stocks to Buy
10. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 36
Hewlett Packard Enterprise Company (NYSE:HPE) is a leading provider of edge computing solutions. Thee company offers a range of edge computing solutions designed to meet the needs of customers in numerous industries, including retail, manufacturing, healthcare, and finance. Hewlett Packard Enterprise Company is among the best edge computing stocks to buy now and is awarding shareholders with a dividend yield of 3.05%, as of December 15.
On November 29, Hewlett Packard Enterprise Company posted earnings for the fiscal fourth quarter of 2022. The company reported an EPS of $0.57 and generated a revenue of $7.87 billion, ahead of Wall Street estimates by $477.54 million. On December 5, Loop Capital analyst Ananda Baruah raised her price target on Hewlett Packard Enterprise Company to $17 from $14 and maintained a Hold rating on the shares.
At the end of Q3 2022, 36 hedge funds were long Hewlett Packard Enterprise Company and disclosed positions worth $842.9 million. This is compared to 37 hedge funds in the previous quarter with stakes worth $709.4 million. As of September 30, Pzena Investment Management is the most prominent shareholder in the company and has a position worth $362.7 million.
Companies that are expected to dominate the edge computing industry for years to come include Alphabet Inc., Microsoft Corporation, and Amazon.com, Inc..
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
International Business Machines Corporation (NYSE:IBM) has been at the forefront of edge computing technology. The company’s edge computing solutions are designed to deliver low latency and real-time analytics. It utilizes cutting-edge technologies like artificial intelligence (AI) and the Internet of Things (IoT) to provide a more robust and efficient computing experience. With the growth of the global edge computing market, International Business Machines Corporation is well-placed to grow its market share and is therefore included in our list of the best edge computing stocks to buy now.
This October, BofA analyst Wamsi Mohan revised his price target on International Business Machines Corporation to $145 from $155 and reiterated a Buy rating on the shares.
As of December 15, International Business Machines Corporation has gained roughly 11% over the past twelve months and is offering a yield of 4.40%.
At the end of the third quarter of 2022, International Business Machines Corporation was held by 40 hedge funds. The stakes of these funds were valued at $868.7 million. As of September 30, Arrowstreet Capital is the top investor in the company and has a position worth $515.76 million.
8. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 42
Arista Networks, Inc. (NYSE:ANET) is a networking company that specializes in edge computing. Arista Networks, Inc. has developed a wide range of edge computing solutions, including software–defined networking (SDN), cloud–based networks, and virtualized networks. Their edge computing solutions are designed to help customers reduce latency, increase network performance, and improve security. Arista Networks, Inc. is a leader in the edge computing business and is placed among the best edge computing stocks to buy now.
Wall Street sees upside to Arista Networks, Inc.. This December, Cowen analyst Paul Silverstein raised his price target on Arista Networks, Inc. to $212 from $203 and reiterated an Outperform rating on the shares.
At the close of Q3 2022, Arista Networks, Inc. was a part of 42 investors’ portfolios that held collective stakes of $987.8 million in the company. This is compared to 48 hedge funds in the previous quarter with stakes worth $851.5 million. As of September 30, Point72 Asset Management is the top investor in the company and has a position worth $223.2 million.
7. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 49
Dell Technologies Inc. (NYSE:DELL) is a market leader in the edge computing space. The company provides a wide range of edge computing solutions ranging from edge gateways, routers, and software to edge servers, storage, and cloud services. The company’s edge computing solutions are designed to help businesses reduce the cost, complexity, and time associated with deploying and managing traditional IT infrastructure. With its size, scale, and reputation, Dell Technologies Inc. is well-positioned to retain its leading position in the edge computing industry and is one of the best edge computing stocks to buy now.
On November 21, Dell Technologies Inc. reported earnings for the third quarter of fiscal 2022. The company reported an EPS of $2.30 and outperformed consensus by $0.69. The company reported a revenue of $24.72 billion and beat revenue estimates by $111.23 million. Shortly after the company’s earnings release, Deutsche Bank analyst Sidney Ho updated his price target on Dell Technologies Inc. to $48 from $55 and maintained a Buy rating on the shares.
At the end of Q3 2022, Dell Technologies Inc. was spotted on 49 hedge funds’ portfolios. These funds held collective positions worth $818.3 million in the company. As of September 30, Point72 Asset Management is the largest shareholder in the company and has stakes worth $139.3 million.
6. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 53
Cloudflare Inc. (NYSE:NET) is an internet services company that provides a range of services including cloud computing, cybersecurity, and edge computing among others. By placing cloud computing resources closer to where data is being generated, Cloudflare, Inc. allows organizations to reduce latency, improve security, and increase scalability. The company has established itself as a leader in various industries it operates in, which include the lucrative edge computing market, and is placed high on our list of the best edge computing stocks to buy now.
On November 7, Baird analyst Shrenik Kothari revised his price target on Cloudflare, Inc. to $67 from $80 and maintained an Outperform rating on the shares. This November, JPMorgan analyst Mark Murphy upgraded Cloudflare, Inc. to Neutral from Underweight and reiterated his $42 price target on the shares, after taking coverage of the stock.
At the close of the third quarter of 2022, 53 hedge funds were long Cloudflare, Inc. and disclosed positions worth $629.1 million in the company. This is compared to 41 hedge funds in the previous quarter with stakes worth $541.1 million. As of September 30, Two Sigma Advisors is the dominant investor in Cloudflare, Inc. and has a position worth $85.5 million in the company.
Here is what Baron Funds had to say about Cloudflare, Inc. in its third-quarter 2022 investor letter:
“We continued to build our position in Cloudflare, Inc. (NYSE:NET) during the quarter as the shares declined with the overall software space and the long-term risk/ reward balance became more compelling. The company reported a strong second quarter, with revenue growth accelerating to 54%, as well as better gross and operating margins. Third quarter guidance was also ahead of Wall Street expectations. Given Cloudflare’s proprietary network and massive global scale, its software products have a disruptive price-performance advantage over competitors. As the company introduces new products as well as disruptive packaging/pricing, its unit level economics should continue to improve over time, with the company already well ahead of its long-term gross margin target of 74%, reporting 78.9% for the second quarter. This drives strong cross/upselling activity with customers, reflected in strong net-dollar expansion rates in excess of 125%. Indeed, in the most recent quarters, customers purchasing five or more products reached 81% of the base, six or more products reached 70% of the base, and seven or more products reached 58% of the base. Enterprise penetration continues to be a key long-term driver, with 1,749 customers now spending over $100,000 annually with the company, growing 61% and now accounting for over 60% of total revenue. With approximately 152,000 paying customers at the end of last quarter, large enterprise customers still represent just 1% of total paid customers and thus a material growth opportunity in the coming years. We continue to have high confidence in the company’s ability to innovate at a rapid pace (announced 20 new products or enhancements in September alone), package and bundle with disruptive pricing, and take material share in its large and growing addressable markets.”
Like Alphabet Inc., Microsoft Corporation, and Amazon.com, Inc., Cloudflare, Inc. is well-positioned to benefit from the secular tailwinds in the enterprise software and edge computing space.
5. Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Holders: 67
Oracle Corporation (NASDAQ:ORCL) is a leading provider of enterprise cloud computing solutions and a major player in the edge computing business. The company’s comprehensive edge computing platform helps organizations to rapidly deploy, manage, and scale their applications and services with low latency and high reliability. Oracle Corporation (NASDAQ:ORCL) is ranked high among the best edge computing stocks to buy now and, as of December 15, the stock has gained 16.34% over the past six months.
Wall Street sees material upside to Oracle Corporation. This December, BMO Capital analyst Keith Bachman raised his price target on Oracle Corporation to $95 from $90 and maintained a Market Perform rating on the shares.
On December 12, Oracle Corporation posted strong earnings for the second quarter of fiscal 2023. The company reported an EPS of $1.21 and outperformed consensus by $0.04. Oracle Corporation generated a revenue of $12.28 billion, up 18.48% year over year, and beat revenue estimates by $257.73 million.
At the end of Q3 2022, 67 hedge funds were bullish on Oracle Corporation and disclosed positions worth $3.27 billion in the company. Of those, First Eagle Investment Management is the largest investor in the company and has a position worth $1.58 billion.
Here is what First Eagle Investments had to say about Oracle Corporation in its second-quarter 2022 investor letter:
“Oracle is one of the world’s largest independent enterprise software companies and has been reinventing itself for the cloud-computing environment, a transition pursued primarily through investments in organic research and design and smallish, well-priced acquisitions. That said, Oracle in June closed its largest-ever deal with the acquisition of Cerner, a designer of software to store and analyze medical records and other healthcare data.
Oracle took on additional debt to finance this all-cash acquisition and as a result plans to moderate its stock-buyback program to focus on debt reduction. Despite the weak quarter for the stock, Oracle’s operations remain strong; it reported better- than-expected results for its most recent quarter and issued upbeat guidance for the coming fiscal year.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 89
NVIDIA Corporation (NASDAQ:NVDA) is at the forefront of the edge computing market. The company is a leading provider of edge computing hardware and chips. The company’s edge computing solutions leverage its graphic processing units (GPUs) to enable organizations to process large amounts of data quickly and efficiently. The NVIDIA EGX platform is designed to bring AI, machine learning, and other advanced analytics to the edge. This platform can be used in a wide range of applications, including autonomous vehicles, factory automation, and smart cities. NVIDIA Corporation is a leader in the space and is expected to retain its position as the industry grows further. The stock is one of the best edge computing stocks to buy now.
On December 14, Deutsche Bank analyst Ross Seymore raised his price target on NVIDIA Corporation to $170 from $150 and maintained a Hold rating on the shares.
At the close of Q3 2022, 89 hedge funds were bullish on NVIDIA Corporation. The funds disclosed positions worth $4.29 billion in the company, up from $3.31 billion in the previous quarter with 84 positions. As of September 30, Fisher Asset Management is the top investor in the company and has disclosed a position worth $1.46 billion.
Here is what ClearBridge Investments had to say about NVIDIA Corporation in its third-quarter 2022 investor letter:
“Likewise, graphics chip maker NVIDIA Corporation (NASDAQ:NVDA) (-19.9%) has struggled through the post-COVID-19 recovery but maintains dominant positions in key secular growth markets of AI and gaming. The company has significantly underperformed the index and semiconductor peers recently due to a gaming inventory correction, a decline in aggregate cryptocurrency demand and reduction in crypto mining intensity as well as concerns around the sustainability of data center sales.
We tactically trimmed our position early in 2022 due to concerns around these cycle dynamics but remain confident in the company’s long-term prospects.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. is an industry-leader in edge computing, allowing businesses to leverage the power of cloud computing while maintaining control of their data. The company is investing heavily in edge computing solutions, such as its Google Distributed Cloud Platform, to help businesses reduce latency and increase efficiency. Alphabet Inc. is placed third on our list of the best edge computing stocks to buy now.
As of August 3, Tigress Financial analyst Ivan Feinseth has a $186 price target and Strong Buy rating on Alphabet Inc..
At the end of Q3 2022, Alphabet Inc. was a part of 156 investors’ portfolios that held collective stakes worth $19.31 billion. Of those, TCI Fund Management was the largest stockholder in the company and held a position worth $5.04 billion.
Here is what Stewart Asset Management had to say about Alphabet Inc. in its third-quarter 2022 investor letter:
“We invest in businesses with strong, resilient earnings growth which are less cyclical. In the pandemic recession of 2020, the aggregate earnings of the portfolios we manage did not decline year-over-year, and in fact grew, albeit modestly. Looking at the Great Recession which began at year-end 2007 and lasted to mid-year 2009 is helpful too. Our four largest current holdings in the portfolio weathered that period well. Alphabet (NASDAQ:GOOG), then called Google, reported earnings that doubled from 2007 to 2010.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 269
Amazon.com, Inc. has a large and growing cloud infrastructure, which is an essential resource for edge computing applications. Amazon Web Services (AWS) is a widely adopted cloud platform, and it provides a variety of services that are essential for edge computing, including compute, storage, networking, and analytics. Amazon.com, Inc. has a strong foundation for success in the edge computing market and is one of the best edge computing stocks to buy now.
On December 8, JMP Securities analyst Nicholas Jones maintained an Outperform rating and his $140 price target on Amazon.com, Inc..
At the end of the third quarter of 2022, 269 hedge funds were long Amazon.com, Inc. and held stakes worth $34.6 billion in the company. This is compared to 252 positions in the previous quarter with stakes worth $30 billion. The hedge fund sentiment for the stock is positive. As of September 30, Ken Fisher’s Fisher Asset Management is the largest investor in Amazon.com, Inc. and has disclosed a position worth $5.63 billion.
Here is what L1 Capital International had to say about Amazon.com, Inc. in its third-quarter 2022 investor letter:
“Quarterly results (mostly reported in late July and early August) were generally in line with our expectations. Solid company execution was subsequently swamped by increases in interest rates and hawkish Federal Reserve commentary. During the quarter, only one company (Amazon.com) made a positive contribution of more than 0.5% in Australian dollars. Amazon.com, Inc.(NASDAQ:AMZN) was the largest negative contributor in the June 2022 quarter, with the share price recovering modestly but it is still well below our view of fair value. No company detracted more than 0.5% from the Fund’s performance in Australian dollars, although the depreciation of the Australian dollar obfuscates some meaningful share price falls in U.S. dollars
We did not participate in the ‘unprofitable tech bubble’, but our portfolio does have significant exposure to some of the largest, highly profitable and incredibly financially strong technology companies which dominate their markets and have outstanding medium to long term growth prospects – including Alphabet, Amazon, Intuit and Microsoft. The share price of these companies has now fallen to levels we now consider provide very attractive valuations for long term investors.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 269
Microsoft Corporation (NASDAQ:MSFT) is one of the leading players in the edge computing market, and it has a number of competitive advantages that help it stand out from its competitors. Microsoft Corporation has a large and diverse portfolio of products and services, from cloud computing and machine learning to artificial intelligence and the Internet of Things (IoT). This gives company a unique advantage in the edge computing market, as it can offer customers a comprehensive solution that covers all their needs. In addition, Microsoft Corporation has a strong track record of developing and deploying cutting–edge technologies that can help customers get the most out of their edge computing solutions. This includes Azure Edge Zones, which provide customers with secure, low–latency networks that help them optimize their edge computing performance. Microsoft Corporation is placed high on our list of the best edge computing stocks to buy now.
On November 29, Morgan Stanley analyst Keith Weiss maintained an Overweight rating and his $307 price target on Microsoft Corporation.
At the close of the third quarter of 2022, Microsoft Corporation was a part of 269 investors’ portfolios that disclosed positions worth $61.17 billion in the company. This is compared to 258 positions in the previous quarter with stakes worth $56 billion. The hedge fund sentiment for the stock is positive. As of September 30, Bill & Melinda Gates Foundation Trust is the top investor in the company and has a position worth $9.14 billion.
Here is what Alger Capital had to say about Microsoft Corporation in its third-quarter 2022 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a positive dynamic change beneficiary of corporate America’s transformative digitization. Microsoft CEO expects technology spending as a percent of gross domestic product (GDP) to jump from about 5% now to 10% in 10 years and that Microsoft will continue to capture market share within the technology sector.
Microsoft’s shares underperformed during the period because the company slightly missed analysts’ estimates. The miss was due to foreign currency headwinds, weakening small business and consumer demand, and decreasing advertising activity. However, Microsoft showed that despite consumer, advertising, and small and medium business weakness; the company’s main business, the digitization of corporate America, continues to grow. We believe the secular forces of cloud adoption (azure and office 365) remain resilient, and the company’s commercial bookings growth attest to the continued demand for digital transformation.”
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This article is originally published at Insider Monkey.
