In this piece, we will take a look at the ten best edge computing stocks to buy now. For more stocks, take a look at 5 Best Edge Computing Stocks to Buy Now.
Last mile delivery is one of the hottest topics in retail right now and has big players such as Walmart Inc. (NYSE:WMT) obsessing over it. If you don't know what last mile delivery is, don't fret since most people don't. Simply put, the concept refers to the final end of a good or product's journey from a warehouse.
But wait. This is a post about edge computing, so what does last mile delivery, retail, or logistics have to do with it? Well, edge computing is the last mile of server computing. Traditionally, companies collect data from a wide variety of products to allow them to streamline their business operations. Before edge computing, this data was collected at the endpoint of a network, such as a smart vehicle, and then computed at data centers a considerable distance away. However, with edge computing, this data crunching is done closer to the source of data. According to computing firm Accenture, this improves both user experience when it comes to using the Internet of Things (IoT) or smart vehicles for consumers, and for companies that use robots, or other gadgets and electronic devices for their operations such as a smart kitchen.
As should be obvious, storing and computing this data close to the source has several advantages. To illustrate these, consider the simplest example of edge computing. Apple Inc. (NASDAQ:AAPL)'s iPhone was the first mainstream smartphone to integrate facial recognition. This service stores a user's facial parameters on a device and uses these to authenticate identity. The iPhone is the perfect example of edge computing since storing the data close to the consumer ensures privacy and results in speedy results - two significant advantages of edge computing as a whole. In addition to privacy and speed, reducing costs is another benefit, since only aggregated analysis or outcomes are transferred to the central server, which reduces the need to invest in large data centers or frees up existing capacity from operations that are best performed on site.
However, in some cases, edge computing can also drive up costs. For instance, analysis from Edge Computing News shows that setting up data centers on the edge leads to higher costs since large hyperscale data centers can compute data more efficiently. Its analysis is based on a three year time horizon and factors in a variety of other considerations such as real estate, setup and cooling costs to outline that for this time period, on site or on premise cloud centers end up costing as much as 55% more than centralized hyper scale data centers. Yet, the report outlines that this does not completely rule out edge computing, as the platform is suited to large companies such as oil firms which have long time horizons and can derive significant benefits from computing data on site to benefit from the lower latencies and easy access.
Building on this, these myriad benefits especially for crucial and valuable industries such as energy lead to optimistic valuations for the edge computing industry. A research report from Grand View Research outlines that the edge computing industry was worth $11.24 billion last year and it will grow at a stunning compounded annual growth rate (CAGR) of 37.9% from then until 2030, to be worth $156 billion by the end of the forecast period. The high double digit CAGR for this industry is among the highest that we have seen and surpasses that of other fast growing industries such as biotechnology. According to the research firm, edge computing was another sector that was boosted by the coronavirus pandemic as firms strived to grow their global footprint. At the same time, Grand View Research also adds that growth in edge computing will see a boost in the future, particularly due to the communications sector.
Looking at what is happening in the industry right now, business is booming for firms that provide edge computing hardware. One such company is Arista Networks, Inc. (NYSE:ANET) which makes and sells networking switches that are the backbone of an edge network. The company's chief operating officer Mr. Anshul Sadana highlighted during its latest earnings call conference shared:
Our partnership with Microsoft and Meta grew even stronger last year. Both of these titans are in the midst of deploying our next-gen 100, 200 and 400-gig products at several key tails of their networks. The cloud is reshaping the Internet with their massive footprint, global backbone and edge partnerships. We are proud to have our products designed into pretty much all of these use cases. In addition, our business with the other titans continued to grow as well. We had additional design wins in backbone, WAN and edge folds. This past year, we ramped our 7800R3 series, high-density, 400-gig, near-lossless spine. We also introduced several new products based on Timeout 4 and our deep buffer virtual output care systems based on Jericho 2 to 7280 and the 7800R3 modular systems.
Mr. Sadana was joined by the company's president and chief executive officer Mr. Jayshree Ullal who outlined:
Considering this is only our third full year of shipping versus incumbents who have been in the market for 15 to 30 years, we are very proud of our execution. Our vision for a cognitive campus with network-as-a-service and edge-as-a-service based on NetDL is resonating extremely well and being embraced by our campus customers. We have also successfully deployed in many routing edge and peering use-cases, such as securing data in transit with TunnelSec encryption, precision and performance for mobile networks, cloud exchanges and metro Ethernet. Enterprise customers can now deploy EOS with a single EVPN protocol, whether it’s for data center, data center interconnect or WAN, delivering multiple profiles. Just in 2022 alone, we introduced 6 EOS software releases, 600 new features across 50 new platforms.
With these details in mind, let's take a look at some top edge computing stocks out of which the top picks are Cloudflare, Inc. (NYSE:NET), Arista Networks, Inc. (NYSE:ANET), and NVIDIA Corporation (NASDAQ:NVDA).
Best Data Center Stocks To Buy
Our Methodology
We started off our list by compiling all companies that provide edge computing software or hardware services. Then, firms such as Amazon.com, Inc. (NASDAQ:AMZN) were removed as even though they have strong services, their primary business operations lie in other industries. The companies are sorted by the number of hedge fund investors as of Q4 2022 courtesy of Insider Monkey's database of 943 hedge funds.
One Stop Systems, Inc. (NASDAQ:OSS) is a diversified edge computing hardware provider, that, as the name suggests, is a one stop platform for products that set up edge networks. The firm is headquartered in Escondido, California.
By the end of last year's fourth quarter, two of the 943 hedge funds polled by Insider Monkey had held a stake in One Stop Systems, Inc. (NASDAQ:OSS). The firm's largest investor is Cynthia Paul's Lynrock Lake which owns 1.7 million shares that are worth $5.3 million.
Arista Networks, Inc. (NYSE:ANET), Cloudflare, Inc. (NYSE:NET), and NVIDIA Corporation (NASDAQ:NVDA) are met by One Stop Systems, Inc. (NASDAQ:OSS) in our list of top edge computing firms.
Edgio, Inc. (NASDAQ:EGIO) is an American firm that is headquartered in Tempe, Arizona. It operates a private content delivery network with hundreds of endpoints all over the globe to enable firms to rapidly deliver content to customers.
As of Q4 2022, 15 of the 943 hedge funds part of Insider Monkey's database had held a stake in Edgio, Inc. (NASDAQ:EGIO). The firm's largest investor in our database is J. Carlo Cannell's Cannell Capital which owns 2.2 million shares that are worth $2.5 million.
Fastly, Inc. (NYSE:FSLY) is an edge cloud platform provider headquartered in San Francisco, California. It allows customers to process and secure applications all over the world.
Insider Monkey took a look at 943 hedge funds for their fourth quarter of 2022 investments and found out that 20 had held a stake in the company. Out of these, Steven Cohen's Point72 Asset Management is Fastly, Inc. (NYSE:FSLY)'s largest shareholder since it owns 5.2 million shares that are worth $42 million.
A10 Networks, Inc. (NYSE:ATEN) is an American firm that provides networking products, application delivery products, and load balancing solutions for edge networks. It is based in San Jose, California.
By the end of 2022's fourth quarter, 22 of the 943 hedge funds part of Insider Monkey's database had bought A10 Networks, Inc. (NYSE:ATEN)'s shares. The firm's largest investor is Jim Simons' Renaissance Technologies which owns 2.4 million shares that are worth $41 million.
Akamai Technologies, Inc. (NASDAQ:AKAM) is a cloud services provider that enables its customers to run content and deliver analytics.
34 of the 943 hedge funds polled by Insider Monkey had bought Akamai Technologies, Inc. (NASDAQ:AKAM)'s shares during Q4 2022. The firm's largest hedge fund investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital which owns 1.3 million shares that are worth $110 million.
Cloudflare, Inc. (NYSE:NET), Akamai Technologies, Inc. (NASDAQ:AKAM), Arista Networks, Inc. (NYSE:ANET), and NVIDIA Corporation (NASDAQ:NVDA) are some great edge computing stocks to buy according to hedge funds.
