We recently compiled a list of the 10 Best Data Storage Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Silicon Motion Technology Corp. (NASDAQ:SIMO) stands against the other data storage stocks.
Data storage involves systematically archiving digital information to ensure its availability and security for future use. This encompasses various methods, including direct attached storage, network attached storage, and cloud-based solutions. The rise of GenAI has significantly impacted the data storage landscape, necessitating new architectures to handle the growing volume and complexity of data generated. Innovations such as cloud storage, SSD technology, and emerging solutions like DNA data storage are shaping the future of data management.
The next-generation data storage market is projected to grow from $65.1 billion in 2024 to $90 billion by 2029, exhibiting a compound annual growth rate of 6.7%, according to MarketsandMarkets. This is attributed to the increasing demand for energy-efficient and compact storage solutions, the rising adoption of NVMe technology in enterprise systems, and the expanding use of 5G technology. North America held the largest share of the market in 2023, accounting for 43.4%, largely due to heightened demand from sectors such as banking, financial services, insurance (BFSI), and healthcare.
High-speed storage solutions enable organizations to process large datasets quickly, which accelerates model training and enhances analytical effectiveness. Real-time data processing is another critical application of next-generation storage. By integrating AI with advanced storage systems, organizations can perform immediate analysis essential for sectors like finance, where fraud detection and predictive maintenance are paramount. Storage Area Networks (SANs) optimize throughput and minimize latency, making them ideal for mission-critical applications.
AI-driven technologies can detect anomalies and potential threats in real-time, providing essential protection against cyber threats as data breaches become more common. Next-generation storage systems also support the growing Internet of Things (IoT) by efficiently managing the vast amounts of data generated by connected devices. Many of these systems also integrate seamlessly with cloud services, allowing businesses to leverage scalable storage options while utilizing AI for improved performance.
As the market adapts to these opportunities, we are here to help you find the 10 best data storage stocks to buy according to hedge funds.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of the top data storage stocks. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
An engineer in a lab coat tweaking a circuit board with intricate semiconductors.
Silicon Motion Technology Corp. (NASDAQ:SIMO)
Number of Hedge Fund Holders: 34
Silicon Motion Technology Corp. (NASDAQ:SIMO) is a leading provider of NAND flash controllers for a wide range of solid-state storage devices, including SSDs for PCs, data centers, and mobile devices. Its customer base includes NAND flash makers, module makers, and hyperscalers.
The company is capitalizing on the growing PC market, particularly through the introduction of its first PCIe 5.0 controllers, which are responsible for managing data flow between the CPU and components like graphics cards, storage devices, and network cards. This move targets the high-end PC segment, which accounts for ~10-15% of the overall PC market. Its PCIe 5.0 controller, which is the first 6-nanometer 8-channel PCIe Gen5 controller in the market, offers unparalleled performance and best-in-class power consumption.
This entry into the high-end PC market is expected to drive significant revenue and margin growth for Silicon Motion Technology Corp. (NASDAQ:SIMO). The company’s strong position in the market, coupled with its innovative technology, will enable it to further strengthen its market leadership.
Ave Maria Growth Fund stated the following regarding Silicon Motion Technology Corporation (NASDAQ:SIMO) in its first quarter 2024 investor letter:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) is a fabless semiconductor company that specializes in low-end flash memory controllers. Memory manufacturers often design their own controllers in-house, but the rising cost of developing a chip is making it increasingly beneficial to outsource the more commoditized low-end controller development to a third party like Silicon Motion. This outsourcing trend is set to move from consumer applications into the server end market, and Silicon Motion’s new enterprise controller is well positioned to capitalize on the growth.”
Overall SIMO ranks 6th on our list of the best data storage stocks to buy according to hedge funds. While we acknowledge the potential of SIMO as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SIMO 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.
