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 Verizon Communications Inc. (NYSE:VZ) 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).
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Verizon Communications Inc. (NYSE:VZ)
Average Analyst Upside: 15.48%
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is a global leader in communication, technology, and entertainment services. Through its Consumer and Business segments, the company offers a wide array of products and services, including wireless and wireline solutions, fixed wireless access (FWA) broadband, IoT offerings, and more.
On December 17, Verizon Communications Inc. (NYSE:VZ) announced a new AI-powered solution developed in collaboration with Nvidia Corp. This innovation enables a variety of AI applications to operate seamlessly over Verizon’s secure 5G private network with private Mobile Edge Compute (MEC). The plug-and-play AI-powered private 5G platform is designed to support third-party developers in driving innovation while remaining adaptable to future advancements in AI and connectivity.
That same day, Raymond James reaffirmed its positive outlook on Verizon Communications Inc. (NYSE:VZ), maintaining an Outperform rating with a $48.00 price target. The firm highlighted Verizon’s strong long-term fundamentals, consistent performance, and attractive dividend yields as key factors for its appeal. For the fourth quarter, Raymond James forecasts conservative postpaid phone net additions of 350,000 in the consumer segment. Meanwhile, business growth expectations are slightly lower due to fewer selling days, with the forecast holding steady at 126,000 net additions.
Third Point Management stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its Q3 2024 investor letter:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
Overall, VZ ranks 6th on our list of best edge computing stocks to invest in according to analysts. While we acknowledge the potential of VZ, 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 VZ 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.