Blog

In an increasingly connected world, the demand for faster, more efficient data processing continues to grow exponentially. Enter edge computing, a revolutionary approach that brings computation and data storage closer to the source of data generation. This paradigm shift is not only transforming how we interact with technology but also creating lucrative opportunities for investors.

In the recent years Cloud computing ETFs have seen remarkable growth. The First Trust Cloud Computing ETF (SKYY), launched in 2011, has $2.86 billion in assets as of June 2024. Tracking the ISE CTA Cloud Computing Index, SKYY has delivered Annual Total Return of 52.18% in 2023. With 60+ holdings including like Oracle, Arista Networks, Microsoft, Amazon, and IBM, SKYY reflects the booming cloud industry.

Launched in 2019, the Global X Cloud Computing ETF (CLOU) has experienced rapid growth, reflecting strong investor interest in cloud technology. CLOU’s assets under management have surged to over $475 million in June 2024. This impressive expansion underscores the rising demand for specialized cloud computing investment opportunities.

Launched in 2014, the ARK Next Generation Internet ETF (ARKW) focuses on disruptive technologies like cloud computing, AI, and blockchain. This actively managed fund has seen explosive growth, with net assets $1.46 billion in June 2024, demonstrating strong investor appetite for innovative tech exposure.

Key Takeaways:

• Edge computing is reshaping the tech landscape, offering faster processing and reduced latency.
• Top edge computing stocks include NVIDIA, Microsoft, Amazon, Alphabet, Arista Networks, Akamai, and Fastly.
• Investing in edge computing stocks provides exposure to multiple high-growth sectors, including 5G, IoT, and AI.
• Consider factors such as financial health, market position, and innovation when evaluating edge computing stocks.

What is Edge Computing?

Edge computing is a distributed computing paradigm that brings data processing and storage closer to the location where it’s needed. Unlike traditional cloud computing, which relies on centralized data centers, edge computing leverages a network of smaller, localized data centers or even individual devices to process data at or near its source.

Edge Computing Market Growth:

The edge computing market is expected to experience rapid growth in the coming years:

• The global edge computing market size is projected to grow from $21.41 billion in 2024 to $216.76 billion by 2032, exhibiting a CAGR of 33.6% during the forecast period. fortunebusinessinsights
• The global edge computing market was valued at $16.45 billion in 2023 and is expected to grow at a CAGR of 36.9% from 2024 to 2030, reaching $155.90 billion by 2030. grandviewresearch
• Analysts estimate the global edge computing market will grow from close to $2 billion in 2017 to anywhere between $15-28 billion by 2025, at a CAGR of around 34% during 2019-2025. stlpartners

Performance Comparison of Top Edge Computing stocks

7 Best Edge Computing Stocks to Buy in 2024

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.

1. Nvidia Corporation (NVDA)

Number of Hedge Fund Holders (Q2 2024): 180

NVIDIA has long been a powerhouse in the graphics processing unit (GPU) market, but its role in edge computing is equally impressive. The company’s expertise in high-performance computing makes it a key player in the edge AI space.

NVIDIA’s Q2 fiscal 2025 results demonstrate impressive growth, with revenue soaring 122% year-over-year to $30 billion. The company’s data center segment, crucial for edge computing applications, saw a remarkable 154% increase, reaching $26.3 billion.

NVIDIA’s innovations in AI and accelerated computing are driving this success. The introduction of new products like NVIDIA NIM and AI Foundry services showcases their commitment to advancing edge AI capabilities for enterprises globally.

According to insidermonkey, Citadel Investment Group, led by Ken Griffin, holds 148,546,600 shares of Nvidia (NVDA), valued at $18.35 billion.

Looking ahead, NVIDIA expects continued strong performance, projecting Q3 revenue of $32.5 billion. This optimistic outlook reflects the growing demand for edge computing solutions and NVIDIA’s position as a leader in this rapidly evolving technological landscape.

According to Wall Street Analyst on NVDA stock. Of the 63 analysts following the stock, 50 give it a Buy and 4 has it at Hold.

Why We Picked Nvidia:

• Dominant position in GPU technology: NVIDIA’s GPUs are crucial for edge AI applications.
• Dedicated edge computing solutions: The EGX platform and Jetson series demonstrate a clear focus on edge computing.
• Strong financial performance: Consistent revenue growth and high profit margins indicate a solid investment opportunity.
• Continuous innovation: NVIDIA’s commitment to R&D keeps it at the forefront of edge AI technology.

2. Microsoft Corporation (MSFT)

Number of Hedge Fund Holders (Q2 2024): 284

While primarily known for its software and cloud services, Microsoft has made significant strides in the edge computing space. The company’s Azure IoT Edge platform is a game-changer for businesses looking to deploy cloud intelligence directly on IoT devices.

Microsoft reported strong fourth-quarter results for fiscal year 2024, with revenue reaching $64.7 billion, a 15% increase year-over-year. The company’s cloud services continued to drive growth, with Microsoft Cloud revenue rising 21% to $36.8 billion.

Across its business segments, Microsoft saw gains in Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Notable highlights include Office 365 Commercial revenue growth of 13% and Azure revenue growth of 29%.

According to insidermonkey, Michael Larson manages $15,593,905,379 for the Bill & Melinda Gates Foundation Trust, which holds 34,889,597 shares of Microsoft Corporation (MSFT) stock.

For the full fiscal year 2024, Microsoft’s revenue totaled $245.1 billion, up 16% from the previous year. The company returned $8.4 billion to shareholders through share repurchases and dividends in Q4 alone.

According to Wall Street Analyst on MSFT stock. Of the 60 analysts following the stock, 49 give it a Buy and 2 has it at Hold.

Why We Picked Microsoft:

• Comprehensive edge computing ecosystem: Azure IoT Edge, Azure Stack Edge, and Windows IoT provide a full suite of edge solutions.
• Strong cloud market presence: Microsoft’s established Azure cloud platform provides a solid foundation for edge computing growth.
• Enterprise relationships: Microsoft’s deep ties with businesses worldwide position it well for edge computing adoption.
• Diversified revenue streams: While edge computing is a growth area, Microsoft’s other business segments provide stability.

3. Amazon.com, Inc. (AMZN)

Number of Hedge Fund Holders (Q2 2024): 313

Amazon is not just an e-commerce giant; it’s also a major player in the cloud computing and edge computing markets through its Amazon Web Services (AWS) division.

Amazon reported strong Q2 2024 results, with net sales increasing 10% to $148.0 billion. Operating income nearly doubled to $14.7 billion, while net income surged to $13.5 billion. North America and AWS segments showed significant growth, with AWS sales rising 19% year-over-year.

The company’s free cash flow improved dramatically, reaching $53.0 billion for the trailing twelve months. Amazon continued to invest in AI capabilities and expand its content offerings, including successful releases on Prime Video.

According to insidermonkey, Fisher Asset Management, led by Ken Fisher, holds approximately 43.8 million shares of Amazon.com, Inc. (AMZN). This stake is valued at about $8.5 billion.

Looking ahead, Amazon expects Q3 2024 net sales between $154.0-158.5 billion and operating income between $11.5-15.0 billion. The company remains focused on operational efficiency and leveraging AI across its businesses.

According to Wall Street Analyst on AMZN stock. Of the 65 analysts following the stock, 54 give it a Buy and 3 has it at Hold.

Why We Picked Amazon:

• AWS dominance: As the leader in cloud computing, Amazon is well-positioned to extend its reach to the edge.
• Innovative edge solutions: AWS Outposts, Wavelength, and Snowball Edge show Amazon’s commitment to edge computing.
• Vast resources: Amazon’s financial strength allows for significant investment in edge technologies.
• Synergy with e-commerce: Edge computing can enhance Amazon’s core business, providing additional growth potential.

4. Alphabet (GOOGL)

Number of Hedge Fund Holders (Q2 2024): 388

Alphabet, Google’s parent company, is leveraging its expertise in AI and cloud computing to make significant inroads in the edge computing market.

Alphabet’s Q2 2024 results show strong performance, with revenues reaching $84.7 billion, up 14% year-over-year. Search and Cloud were key drivers, with Cloud surpassing $10 billion in quarterly revenue for the first time.

Operating income increased to $27.4 billion, with a 32% operating margin. Google Services remained the largest segment, generating $73.9 billion in revenue, while Google Cloud achieved $1.2 billion in operating profit.

According to insidermonkey, Ken Fisher’s Fisher Asset Management holds 48.62 million shares of Alphabet (GOOGL), valued at approximately $8.86 billion.

The company continues to invest in AI innovation across its technology stack. Alphabet also announced a $0.20 per share dividend, payable in September 2024, as part of its ongoing capital return program.

According to Wall Street Analyst on GOOGL stock. Of the 65 analysts following the stock, 42 give it a Buy and 14 has it at Hold.

Why We Picked Alphabet:

• AI and machine learning expertise: Google’s leadership in AI is a significant advantage in edge computing applications.
• Cloud infrastructure: Google Cloud provides a strong foundation for edge computing expansion.
• Research capabilities: Alphabet’s commitment to cutting-edge research positions it well for future edge computing innovations.
• Diverse technology portfolio: From Android to autonomous vehicles, Alphabet has multiple avenues to leverage edge computing.

5. Arista Networks (ANET)

Number of Hedge Fund Holders (Q2 2024): 65

Arista Networks specializes in cloud networking solutions, making it a crucial player in the edge computing ecosystem. The company’s high-performance switches and routers are essential for building robust edge computing infrastructure.

Arista Networks showcased robust growth in Q2 2024, with revenue climbing to $1.69 billion, a 15.9% increase from the previous year. The company’s financial health was evident in its GAAP net income of $665.4 million, translating to $2.08 per diluted share.

In response to evolving market demands, Arista unveiled new AI-centric networking solutions. The Etherlink AI platforms and strategic collaborations with NVIDIA underscore the company’s commitment to enhancing performance for complex AI workloads.

According to insidermonkey, Ken Griffin’s Citadel Investment Group has a put position in Arista Networks (ANET) worth $301.3 million, comprising 859,600 shares.

For Q3 2024, Arista projects revenue between $1.72-1.75 billion and a non-GAAP gross margin of 63-64%. These forecasts reflect the company’s ongoing focus on balancing growth and profitability as it navigates the dynamic networking industry landscape.

According to Wall Street Analyst on ANET stock. Of the 26 analysts following the stock, 16 give it a Buy, 6 has it at Hold and one calls it a Sell.

Why We Picked Arista Networks:

• Networking expertise: As edge computing relies heavily on efficient networking, Arista’s core competency is highly relevant.
• Strong growth: Arista has shown consistent revenue growth and market share gains.
• Key partnerships: Relationships with major cloud providers give Arista an advantage in edge deployments.
• Focus on software-driven networking: This approach aligns well with the needs of edge computing infrastructure.

6. Akamai (AKAM)

Number of Hedge Fund Holders (Q2 2024): 31

Akamai is a global leader in content delivery network (CDN) services, making it well-positioned to benefit from the growth of edge computing. The company’s extensive network of edge servers allows it to deliver content and compute resources closer to end-users.

Akamai Technologies reported solid Q2 2024 results, with revenue reaching $980 million, a 5% year-over-year increase. Security and compute solutions now comprise two-thirds of total revenue, growing 17% compared to the previous year.

The company’s financial performance remained strong, with GAAP net income per diluted share at $0.86 and non-GAAP net income per diluted share at $1.58. Akamai continues to focus on growth areas while maintaining profitability and shareholder value.

According to insidermonkey, Citadel Investment Group, led by Ken Griffin, holds a $113 million stake in Akamai (AKAM), consisting of 1.25 million shares.

Looking ahead, Akamai projects Q3 2024 revenue between $988 million and $1,008 million. The company expects security revenue growth of 15-17% and compute revenue growth of 23-25% for the full year 2024.

According to Wall Street Analyst on AKAM stock. Of the 25 analysts following the stock, 11 give it a Buy, 9 has it at Hold and one calls it a Sell.

Why We Picked Akamai:

• Extensive edge network: Akamai’s global content delivery network provides a ready-made platform for edge computing services.
• Security focus: As security becomes increasingly important at the edge, Akamai’s expertise in this area is valuable.
• Established customer base: Akamai’s existing relationships with major enterprises can drive adoption of its edge computing solutions.
• Consistent performance: The company has shown steady growth and profitability over the years.

7. Fastly (FSLY)

Number of Hedge Fund Holders (Q2 2024): 23

Fastly is a newer player in the edge computing space but has quickly made a name for itself with its powerful edge cloud platform. The company’s focus on developer-friendly tools and high-performance edge computing capabilities has attracted a growing customer base.

Fastly reported Q2 2024 results with revenue of $132.4 million, up 8% year-over-year. Enterprise customer count grew 4% sequentially, but the company faces demand challenges from large customers. GAAP net loss widened to $43.7 million from $10.7 million in Q2 2023.

The company achieved product and business milestones, including recognition as a Gartner Peer Insights Customers’ Choice for WAAP. Fastly launched new offerings like AI Accelerator and enhanced its Managed Security Service.

According to insidermonkey, Opti Capital Management, led by Xiuping Li, holds a position in Fastly (FSLY) worth $42.85 million. This investment comprises 46.96 million shares of the company’s stock.

For Q3 2024, Fastly projects revenue between $130-134 million. The full year 2024 guidance estimates revenue of $530-540 million, with a non-GAAP net loss per share between $0.16 and $0.11.

According to Wall Street Analyst on FSLY stock. Of the 13 analysts following the stock, 2 give it a Buy and 10 has it at Hold.

Why We Picked Fastly:

• Innovative edge computing platform: Compute@Edge offers unique capabilities that set Fastly apart from competitors.
• Developer-friendly approach: This can lead to increased adoption and loyalty among the crucial developer community.
• High growth potential: As a smaller company focused primarily on edge computing, Fastly offers the potential for significant growth.
• Disruptive technology: Fastly’s serverless edge computing model could reshape how businesses approach edge deployments.

CHECK OUT OTHER STOCKS

Conclusion

Edge computing represents a significant shift in how we process and interact with data, offering immense potential for investors. The seven stocks we’ve explored – NVIDIA, Microsoft, Amazon, Alphabet, Arista Networks, Akamai, and Fastly – are well-positioned to capitalize on this growing trend.

FAQs

1. What are the best edge computing stocks?

Leading edge computing companies offer promising investment opportunities. Major tech giants like Amazon, Microsoft, and Alphabet are at the forefront, providing both hardware and software solutions. Nvidia stands out for its specialized chips enabling AI and robotics applications at the edge. Other notable players include Arista Networks, Akamai, Fastly, and Cloudflare, focusing on content delivery and edge computing services. For diversified exposure, investors might consider ETFs such as First Trust Cloud Computing ETF or Global X Cloud Computing ETF.

2. Does edge computing have a future?

Edge computing’s future looks bright, fueled by increasing demand for real-time processing and IoT growth. Market projections suggest significant expansion, with estimates ranging from $110-111 billion by 2028-2029. By 2025, over half of enterprise data is expected to be processed outside traditional data centers. The integration of AI with edge computing will likely enhance its capabilities further. However, widespread adoption may face challenges related to costs and implementation strategies.

3. What is the difference between edge computing and cloud computing? 

Edge computing processes data closer to where it’s generated, while cloud computing relies on centralized data centers. Edge computing offers lower latency and reduced bandwidth usage, making it ideal for real-time applications and IoT devices.

4. How does 5G technology impact edge computing stocks?

5G technology complements edge computing by providing faster, more reliable connectivity. This synergy is likely to drive growth for companies involved in both 5G and edge computing, potentially boosting stock performance.

5. Is edge computing in demand?

Edge computing is experiencing high demand, with the market projected to grow at a CAGR of 37.9% by 2030. This surge is driven by the increasing amount of data generated by IoT devices and automated systems. Edge computing offers numerous benefits, including lower latency, improved bandwidth efficiency, enhanced security, offline functionality, scalability, and potential cost savings. These advantages make it valuable across various sectors, including healthcare, manufacturing, retail, and smart city initiatives.