We recently compiled a list of the Edge Computing Market Size and 7 Best Stocks To Buy. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other edge computing stocks.
What is Edge Computing?
The information technology sector has consistently outperformed investor and analyst expectations in 2023, and this trend appears to be continuing into the current year. This impressive performance can largely be attributed to significant advancements such as the rise of artificial intelligence (AI) and generative AI, which have driven tech stock prices to unprecedented highs. Of course, AI is not the only area that is revolutionizing the technology space. Edge Computing comes in as another compelling area of growth and investment. Also known as Mobile Edge Computing (MEC) or Multi-Access Edge Computing, Edge Computing focuses on bringing computing power closer to where data is generated, rather than relying on a centralized cloud-based system. In layman’s terms, Edge Computing involves relocating part of the storage and computing capabilities from a central data center to locations near the data sources.
By keeping computational capacity close to users, devices, or data sources, edge solutions offer benefits such as reduced latency, increased bandwidth, local device processing, and data offloading. For instance, smart speakers perform minimal computational work, sending requests to servers owned by the provider. With Edge Computing, smart speakers could process a user’s request entirely on the device itself. Gartner, in its March 2024 Market Guide for Edge Computing, states:
“By placing data, data management capabilities and analytic workloads at optimal points, ranging all the way to endpoint devices, enterprises can enable more real-time use cases. In addition, the flexibility to move data management workloads up and down the continuum from centralized data centers or from the cloud-to-edge devices will enable greater optimization of resources.”
Edge Computing with the Internet-of-Things & Artificial Intelligence
The automotive industry is a prime example of rapid advancements driven by edge computing and artificial intelligence (AI) integration in recent years. As vehicles evolve to incorporate self-driving capabilities, these technologies have become essential for effective decision-making and real-time responses. For instance, Tesla leverages extensive real-world driving data to refine its AI algorithms for autonomous driving. The rollout of EV maker’s Full Self-Driving (FSD) beta software to more drivers highlights its performance in real-world conditions, with the vast amount of visual data collected during these drives enhancing the company’s AI learning process.
Furthermore, the advent and adoption of 5G, the fifth generation of cellular network technologies offering substantially greater bandwidth, is accelerating the growth of Internet-of-Things (IoT) and facilitating the widespread adoption of edge computing. With 5G networks enabling lightning-fast speeds and a greater number of connected devices, data volumes are expected to surge. Predictions state that by 2025, every connected person will interact with digital data at least once every 18 seconds, largely due to the billions of IoT devices projected to generate over 90 zettabytes of data by then.
Edge Computing Market to Reach $217 Billion by 2032
According to a report by Fortune Business Insights, the global edge computing market was valued at $15.96 billion in 2023 and is projected to grow from $21.41 billion in 2024 to $216.76 billion by 2032, at a compound annual growth rate of 33.6% over the forecast period. This growth is fueled by the increasing adoption of edge devices, ranging from IoT devices such as mobile point-of-sale kiosks and smart cameras to computational infrastructure that enables faster and real-time data analysis at the source. On the other hand, PwC projects that the global market for edge data centers will nearly triple, growing from $4 billion in 2017 to $13.5 billion this year. This expansion is driven by the potential of locally situated data centers to reduce latency, manage intermittent connections, and facilitate data storage and computation close to end-users.
With these details in mind, let’s take a look at some of the best edge computing stocks to buy now.
Our Methodology
For our list of the best edge computing stocks, We began by sifting through ETFs’ holdings and online rankings to gather a preliminary list of 15 stocks. We then scanned Insider Monkey’s first-quarter database which tracks 920 elite money managers and selected the top seven that were the most widely held by hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 186
NVIDIA Corporation (NASDAQ:NVDA) is an American multinational technology company incorporated in Delaware and headquartered in Santa Clara, California. Renowned for its expertise in developing integrated circuits, the company’s products are used in various devices, including electronic game consoles and personal computers (PCs). The NVIDIA EGX platform notably extends the power of accelerated computing from data centers to edge locations, providing a range of optimized hardware components along with user-friendly deployment, applications, and management software.
According to Insider Monkey’s first-quarter database, 186 hedge funds held stakes in NVIDIA Corporation (NASDAQ:NVDA), up from 173 in the previous quarter. One of the prominent stakeholders is Rajiv Jain’s GQG Partners, with nearly 13.36 million shares valued at $12.07 billion.
NVIDIA Corporation (NASDAQ:NVDA) recently shook the market again as one of the world’s largest tech ETFs is on the brink of a significant shift due to the chipmaker surpassing Apple Inc. in market size. Due to diversification rules, the $67 billion Technology Select Sector SPDR Fund has held significantly fewer NVDA shares for months, even as the AI giant’s value has soared. Currently, NVIDIA Corporation (NASDAQ:NVDA) accounts for roughly 6% of the fund’s assets, compared to 21% in the S&P 500 Information Technology Index, causing XLK to underperform significantly this year. With the company’s recent surge past Apple in value, its representation in XLK could see a substantial increase during the ETF’s quarterly rebalance at the end of this month.
RiverPark Large Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our top contributor in the quarter following blowout 4Q results and 1Q guidance driven by strong data center sales. The company reported quarterly revenue of $22.1 billion, up 265% year-over-year, and EPS in the quarter of $5.16, up 487% year-over-year and 12% ahead of expectations. Revenue guidance for 1Q of $24 billion was 8% above very high expectations. The artificial intelligence arms race kicked-off by ChatGPT and Alphabet’s Bard, among others, has generated tremendous demand for Nvidia’s next generation graphic processors.
NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following recent results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “a trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”
Overall NVDA ranks 3rd on our list of the best edge computing stocks to buy. You can visit Edge Computing Market Size and 7 Best Stocks To Buy to see the other edge computing stocks that are on hedge funds’ radar. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.