In this article, we will look at the 10 best edge computing stocks to buy. If you want to skip our detailed analysis of the edge computing industry and explore similar stocks, you can go directly to 5 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 (NYSE:HPE) 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 (NYSE:HPE) 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 (NYSE:HPE) 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 (NYSE:HPE) 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. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).
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 (NYSE:IBM) 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 (NYSE:IBM) to $145 from $155 and reiterated a Buy rating on the shares.
As of December 15, International Business Machines Corporation (NYSE:IBM) 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 (NYSE:IBM) 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. (NYSE:ANET) 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. (NYSE:ANET) 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. (NYSE:ANET). This December, Cowen analyst Paul Silverstein raised his price target on Arista Networks, Inc. (NYSE:ANET) to $212 from $203 and reiterated an Outperform rating on the shares.
At the close of Q3 2022, Arista Networks, Inc. (NYSE:ANET) 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. (NYSE:DELL) 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. (NYSE:DELL) 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. (NYSE:DELL) to $48 from $55 and maintained a Buy rating on the shares.
At the end of Q3 2022, Dell Technologies Inc. (NYSE:DELL) 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. (NYSE:NET) 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. (NYSE:NET) to $67 from $80 and maintained an Outperform rating on the shares. This November, JPMorgan analyst Mark Murphy upgraded Cloudflare, Inc. (NYSE:NET) 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. (NYSE:NET) 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. (NYSE:NET) and has a position worth $85.5 million in the company.
Here is what Baron Funds had to say about Cloudflare, Inc. (NYSE:NET) 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. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Cloudflare, Inc. (NYSE:NET) is well-positioned to benefit from the secular tailwinds in the enterprise software and edge computing space.
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Disclosure: None. 10 Best Edge Computing Stocks to Buy is originally published on Insider Monkey.
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