We recently published a list of 12 Best Edge Computing Stocks to Invest in According to Analysts. In this article, we are going to take a look at where Check Point Software Technologies Ltd. (NASDAQ:CHKP) stands against other best edge computing stocks to invest in according to analysts.
Tech stocks have definitely grabbed the spotlight in the tech world, especially with the rise of generative AI. But there’s more to the sector that could be worth investors’ attention. Edge computing, for example, is another area within tech that’s primed for significant growth. Also known as Mobile Edge Computing (MEC) or Multi-Access Edge Computing, edge computing aims to bring computing power closer to where data is generated instead of relying solely on centralized cloud systems. Sometimes called the “Third Act of the Internet” by the Linux Foundation, edge computing changes the game by moving data storage and processing closer to local network points. This shift is a major step in how we handle and interact with information.
A new forecast from the IDC, global spending on edge computing is projected to hit $228 billion in 2024, reflecting a 14% increase from 2023. This figure covers combined spending by enterprises and service providers on hardware, software, professional services, and provisioned services for edge solutions. The forecast predicts continued strong growth through 2028, with spending expected to approach $378 billion, driven by a robust double-digit compound annual growth rate (CAGR).
This growth is driven by the increasing demand for localized network infrastructure and computing power, fueled by the rise of the Internet of Things (IoT)—a network of connected devices. As more data is generated at the endpoints, the traditional network structure faces more strain. The rollout of 5G, which offers higher bandwidth and the ability to support more connected devices, is boosting IoT and driving the need for edge computing. At the same time, AI-optimized processors are providing the computing power necessary to expand the use of edge systems. The automotive industry is a great example of how edge computing and AI are driving rapid advancements. As cars increasingly adopt self-driving features, these technologies have become crucial for making real-time decisions and responses.
According to Fortune Business Insights, the global edge computing market, valued at $10.11 billion in 2023, is expected to grow from $13.66 billion in 2024 to a staggering $181.96 billion by 2032, reflecting a CAGR of 38.2%. This rapid expansion is driven by the increasing adoption of edge devices, such as mobile point-of-sale kiosks and smart cameras, as well as computational infrastructure enabling real-time data analysis at the source. Similarly, PwC had predicted that the global market for edge data centers will nearly triple, rising from $4 billion in 2017 to $13.5 billion in 2024. This growth is fueled by the ability of localized data centers to reduce latency, manage intermittent connections, and deliver storage and computational power closer to end-users.
Our Methodology
To create our list of the top edge computing stocks to invest in according to analysts, we reviewed various stock screeners and ETFs, selecting companies based on their upside potential as of December 17. The stocks are ranked by their average upside potential, from lowest to highest, according to price targets. We also included data on the number of hedge funds holding stakes in these stocks, based on Insider Monkey’s Q3 hedge fund data.
Why do we care about what hedge funds do? 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 typing on a computer, developing the latest cybersecurity application.
Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Average Analyst Upside: 10.83%
Number of Hedge Fund Holders: 32
Check Point Software Technologies Ltd. (NASDAQ:CHKP) specializes in developing, designing, and marketing enterprise software, offering services such as threat prevention, web security, security management, and software-defined protection. The company has also enhanced its Harmony SASE offering by integrating its proprietary SD-WAN and IoT security capabilities, streamlining the management of secure access service edge solutions.
In Q3 2024, Check Point Software Technologies Ltd. (NASDAQ:CHKP) introduced its AI-powered Quantum Firewall R82 and reported a 7% year-over-year increase in revenue, reaching $635 million. Non-GAAP earnings per share rose 9% to $2.25, while subscription revenue grew by 12%. Additionally, the company’s $186 million acquisition of Cyberint is expected to bolster its security operations capabilities.
Following these results, Barclays revised its outlook on Check Point Software Technologies Ltd. (NASDAQ:CHKP), lowering its price target from $210 to $200 but maintaining an Overweight rating on the stock. Barclays predicts high single-digit growth for Q4 2024, reflecting the inclusion of delayed deals, while setting expectations for approximately 5% growth in FY 2025, noting tougher year-over-year comparisons for Check Point Software Technologies Ltd. (NASDAQ:CHKP).
Ariel Global Fund stated the following regarding Check Point Software Technologies Ltd. (NASDAQ:CHKP) in its Q3 2024 investor letter:
“Israeli based provider of products for information technology security, Check Point Software Technologies Ltd. (NASDAQ:CHKP) also advanced following solid quarterly earnings results. Double-digit billings growth was particularly strong across geographies. Consumers appear to be adopting more pillars of Check Point’s platform and engaging in larger strategic commitments with Infinity and Quantum Force. The company also announced the appointment of new CEO Nadav Zafrir, whose reputation is well established in the cyber community. Meanwhile, Check Point continues to be an astute steward of capital, pursuing organic growth and utilizing surplus cash to return capital to shareholders. We continue to favor the company’s exposure to the fast-growing cloud security market and its industry leading profitability.”
Overall, CHKP ranks 9th on our list of best edge computing stocks to invest in according to analysts. While we acknowledge the potential of CHKP, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CHKP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.