10 Best Data Storage Stocks To Buy Now

In this article, we discuss 10 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. 

Copyright: ralwel / 123RF Stock Photo

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.”

5. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 99

Adobe Inc. (NASDAQ:ADBE) is a diversified software company that provides multiple storage solutions. One of the storage solutions offered by Adobe Inc. (NASDAQ:ADBE) is Adobe Creative Cloud, which enables users to store and access their creative files securely in the cloud. Similarly, Adobe Experience Cloud provides storage capabilities for managing and organizing digital assets within an enterprise environment. Moreover, Adobe Document Cloud offers storage capabilities for securely storing and managing electronic documents. Adobe Inc. (NASDAQ:ADBE) is one of the best data storage stocks to invest in. 

On June 15, Adobe Inc. (NASDAQ:ADBE) reported a Q2 non-GAAP EPS of $3.91 and a revenue of $4.82 billion, outperforming Wall Street estimates by $0.12 and $50 million, respectively. 

According to Insider Monkey’s first quarter database, 99 hedge funds were bullish on Adobe Inc. (NASDAQ:ADBE), with collective stakes worth $7.3 billion. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company. 

Polen Focus Growth Strategy made the following comment about Adobe Inc. (NASDAQ:ADBE) in its Q1 2023 investor letter:

“One area we are watching regarding Alphabet and Adobe Inc. (NASDAQ:ADBE) is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.

As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”

4. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 136

Salesforce, Inc. (NYSE:CRM) provides scalable and flexible storage options to accommodate the needs of businesses. Salesforce, Inc. (NYSE:CRM)’s storage solutions also integrate with other features of the CRM platform, such as sales, marketing, and service automation. It is one of the best data storage stocks to invest in. On May 31, Salesforce, Inc. (NYSE:CRM) reported a Q1 non-GAAP EPS of $1.69 and a revenue of $8.25 billion, outperforming Wall Street consensus by $0.08 and $80 million, respectively. In the first quarter, Salesforce, Inc. (NYSE:CRM)’s stockholders also received $2.1 billion through share repurchases.

According to Insider Monkey’s first quarter database, 136 hedge funds were long Salesforce, Inc. (NYSE:CRM), compared to 117 funds in the prior quarter. Harris Associates is the biggest stakeholder of the company, with 7.71 million shares worth $1.5 billion. 

Ithaka US Growth Strategy made the following comment about Salesforce, Inc. (NYSE:CRM) in its first quarter 2023 investor letter:

“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects: (1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s strong relative performance followed a strong F4Q23 earnings release that easily beat Street expectations on the top- and bottom-lines. In addition to the beat, management announced a number of initiatives that activist investors have been clamoring for, specifically a halt to large M&A transactions and a focus on operating profitability.”

3. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 155

Alphabet Inc. (NASDAQ:GOOG)’s Google Cloud Storage provides businesses with a reliable, scalable, and secure solution for storing and managing their data in the cloud. It is one of the best data storage stocks to invest in. On April 25, Alphabet Inc. (NASDAQ:GOOG) reported a Q1 GAAP EPS of $1.17 and a revenue of $69.79 billion, outperforming market estimates by $0.10 and $950 million, respectively. On April 19, 2023, Alphabet’s board of directors granted authorization for the company to buy back an extra $70.0 billion worth of its Class A and Class C shares.

According to Insider Monkey’s first quarter database, 155 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG), compared to 152 funds in the prior quarter. Harris Associates is the leading position holder in the company, with 36.90 million shares worth $3.8 billion. 

ClearBridge Large Cap Value Strategy made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its first quarter 2023 investor letter:

“While Alphabet Inc. (NASDAQ:GOOG) was another positive contributor in the quarter, we trimmed the position given the launch of Microsoft’s new generative AI product (“Bing AI”) which is targeted directly at Alphabet’s core search business. While we believe Alphabet’s business model is likely to remain resilient given the breadth of its user data as well as its internal innovations around AI, we continue to monitor the area closely given the rapid adoption of ChatGPT and other generative AI products.”

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 243

Amazon.com, Inc. (NASDAQ:AMZN) offers extensive and scalable storage options as part of its cloud computing platform, Amazon Web Services (AWS). With AWS storage services, users can securely store and manage their data in the cloud. Amazon.com, Inc. (NASDAQ:AMZN) is one of the top data storage stocks to watch. On April 27, Amazon.com, Inc. (NASDAQ:AMZN) reported a Q1 GAAP EPS of $0.31 and a revenue of $127.4 billion, exceeding Wall Street estimates by $0.11 and $2.85 billion, respectively. AWS segment sales rose 16% year-over-year to $21.4 billion.

According to Insider Monkey’s first quarter database, 243 hedge funds were bullish on Amazon.com, Inc. (NASDAQ:AMZN), compared to 240 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is a prominent stakeholder of the company, with 15.6 million shares worth $1.6 billion. 

Alphyn Capital Management made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2023 investor letter:

“In my 2002 Q4 letter, I outlined quantitative reasoning for why I believe the company’s financials mask its true earnings power. More qualitatively, Amazon.com, Inc. (NASDAQ:AMZN) continues to make strategic strides that enhance its appeal as an investment. Firstly, Amazon’s willingness to streamline costs and shutter underperforming initiatives demonstrates prudent financial management. The company’s overhaul of its fulfillment network, transitioning from a national to a regional model, will improve efficiency and delivery speed, resulting in lower costs and increased customer satisfaction, both critical drivers of revenue growth. Second, Amazon’s unparalleled scale, leading e-commerce platform position, and technology investments attract advertisers eager to engage with its vast customer base and provide consumers with highly targeted ads. This strategy has propelled Amazon’s advertising business to surpass broader market trends. Finally, Amazon remains a long-term growth entity. With retail, 80% of shopping is still offline, and Amazon has been steadily expanding its business sales (currently at $35 billion) and international presence. With AWS, despite near-term conservative enterprise spending, 90% of global IT spending remains on-premise. With other bets, Amazon has ambitious forays into diverse sectors such as grocery, healthcare, and satellite internet connectivity.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 289

Microsoft Corporation (NASDAQ:MSFT) offers storage options through its cloud computing platform, Microsoft Azure. Microsoft Azure offers different features, performance levels, and pricing models to cater to various storage requirements. Microsoft Corporation (NASDAQ:MSFT) is one of the best data storage stocks to monitor. On June 14, the company declared a quarterly dividend of $0.68 per share, in line with previous. The dividend is payable on September 14, to shareholders of record on August 17. 

According to Insider Monkey’s first quarter database, 289 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 259 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder of the company, with 39.2 million shares worth $11.3 billion. 

L1 Capital International Fund made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its first quarter 2023 investor letter:

“We commented in the December 2022 Quarterly Report “sentiment towards many high-quality technology and ecommerce related businesses like Amazon and Alphabet is negative. Capital flows and an over-emphasis on short-term challenges is driving share prices well below fair value, providing compelling investment opportunities for longer term investors”. In that report we outlined in detail why Amazon’s share price has been oversold and offered compelling value.

During the March 2023 quarter the share price of many large capitalization technology companies increased significantly. The Fund has investments in Alphabet, Amazon and Microsoft Corporation (NASDAQ:MSFT) and their share prices increased 17%, 23% and 20% (in U.S. dollars), respectively. While we continue to see value in these privileged, high-quality businesses, share prices are no longer trading at materially oversold levels and we have selectively started to trim some of the Fund’s exposure. Microsoft was trimmed due to share price performance and position size.”

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Disclosure: None. 10 Best Data Storage Stocks To Buy Now is originally published on Insider Monkey.