Edge computing is the process of moving data and software into regional data centers that are positioned closer to the user's location.
During the 2020s, the industry of edge computing is predicted to grow at a double-digit percentage rate.
Technology developments such as artificial intelligence (AI) and 5G mobile networks are made possible thanks to the efforts of the greatest edge computing firms.
We should discuss cloud computing briefly before discussing edge computing. Cloud computing enables enterprises to offload a portion of their computing requirements to a cloud service provider. This technique reduces costs, as investing in hardware and operating servers on-premises can be costly. The cloud enables organizations to develop more performant IT ecosystems by storing data and operating apps remotely.
However, cloud computing does have some drawbacks. Among the disadvantages of this architecture is the requirement for PCs to communicate with remote servers in order to save or retrieve data. Latency can be a concern, particularly in applications where customers require real-time access to data or run apps that consume a large amount of RAM. Additionally, there are concerns with bandwidth and network rates when numerous users simultaneously send and receive data from the cloud.
These issues are addressed via edge computing. It is not a substitute for cloud computing but rather a supplement to an established cloud infrastructure. The term 'edge' is used to refer to a region's geographic distribution. Rather than relying entirely on the cloud or one of the numerous data centers, edge computing enables data processing within the network, resulting in reduced latency and bandwidth.
The major objective of edge computing is not to completely replace the cloud but to address areas where cloud computing falls short. Edge computing aims to reduce bandwidth consumption while increasing security, privacy, and dependability.
Edge computing lets computation and data storage occur closer to the devices from which they are collected rather than being centralized in a cloud-based location. This improves an application's performance by removing the latency associated with real-time data processing. Edge computing may have applications in the oil and gas industry, autonomous vehicles, medical monitoring, smart city management, cloud gaming, and traffic control.
Edge computing adds another layer to an IT environment, and this layer brings computing capabilities to the user's fingertips. Rather than talking with a remote cloud server, users can transmit and receive data through a layer of edge computing that is geographically closer to them, resulting in decreased latency.
Edge computing has a variety of uses. Certain businesses utilize this technology to store data in edge nodes or cloudlets. Certain firms leverage edge computing for a variety of purposes, including compute offloading, caching, and IoT management.
Because operating every part of a game in the cloud would result in significant latency, edge computing is standard in cloud-based gaming systems. Additionally, there are applications for linked things such as smart home systems and self-driving automobiles, as these devices require real-time AI capabilities.
Many industries can benefit from edge computing, from remote asset monitoring in the oil and gas industry to patient monitoring solutions in healthcare.
This technology will also expand in tandem with the 5G rollout, as edge computing will improve the performance of virtual mobile networks by utilizing edge nodes in cell towers.
Edge computing occurs at or near the data source, using computers no larger than a human hand. Edge computing, according to Gartner, is "a component of a distributed computing topology in which information processing occurs close to the edge - where things and people produce or consume that information."
How is Edge Computing Implemented?
To illustrate how edge computing works, consider a corporation such as Walmart. Each day, Walmart processes billions of pieces of information. Every day, each Walmart site processes tens of thousands of transactions. Walmart may utilize this data to gain a complete picture of its operations. For instance, it can assist Walmart's management in determining which products are purchased and when. Walmart may then use this data to tailor marketing campaigns and reimagine its stores.
Assume Walmart utilizes a cloud computing system to assist in processing all of this data. Data is transported from thousands of Walmart sites to a small number of data centers. This process is time-consuming, can overload the network, and can result in congestion.
A more efficient solution would be for Walmart to use a data center located at each of its locations. Each regional data center would process data from that particular location. After extracting meaningful insights from the data, it can be transferred to Walmart's primary data hub. This enables Walmart to process data far more quickly.
Edge computing is a key enabler of technologies such as self-driving cars, the Internet of Things, and artificial intelligence. Having stated that, let's examine how you might invest in this quickly rising market.
Prior to investing in edge computing stocks, it's critical to understand what to look for in these stocks:
The financial health of the business is critical. The most recent sales figures are typically a strong indicator of the company's performance.
The scale of the business is significant. It's a market where huge technology businesses have an advantage, particularly if they have a strong cloud computing presence.
Additionally, you should invest in the company's leadership and ESG efforts.
Assess the debt-to-income ratio to ascertain the company's ability to grow sustainably.
Additionally, you can examine a company's present market share to determine whether there is room for growth.
When investing in edge computing, it's also important to consider the company's technology and how it fits into your investment plan.
For instance, certain stocks will appreciate in value if there is a compelling use case for the technology offered by the company.
Businesses that have edge computing technologies in place to assist the 5G deployment are excellent candidates. However, other businesses are developing edge computing solutions that may require additional time to become viable.
Another critical factor to consider is integration. Edge computing technologies are frequently integrated into a larger cloud-based architecture. Businesses that provide cloud services or edge computing technologies that are interoperable with popular cloud services would benefit.
Prior to investing in edge cloud stocks, it is prudent to conduct additional research into a company's other areas of expertise.
Businesses that can diversify their operations and offer a variety of products powered by solutions such as AI and machine learning, cybersecurity, cloud computing, or the Internet of Things will be more likely to succeed in the future.
What Makes a Good Stock in Edge Computing?
Your investing strategy and risk tolerance determine how you invest in edge computing stocks. The best edge computing stocks are those that have the ability to disrupt an industry or provide businesses with a competitive edge.
Additionally, you can find performing stocks by searching for products with a broad range of applications or for products with specific applications in high-growth industries such as healthcare or Industry 4.0.
As with other fields of technology, there is further potential for tech giants that already have a substantial footprint through popular tech goods and services. These companies are notoriously difficult to compete with, and their stocks are an excellent addition to your portfolio if you have a low tolerance for risk.
Small and medium-sized edge computing businesses may have a larger potential for growth, but they also carry a bigger risk. If they have a strong intellectual property portfolio, some of these companies are excellent candidates for mergers and acquisitions.
Additionally, stock value is critical. Because edge computing is a relatively new market, some speculation may result in an overvaluation of edge computing stocks.
The 8 Best Edge Computing Stocks to Buy in 2022
1. Microsoft Corporation (MSFT)
MSFT is a software company that produces and maintains a variety of software products, services, devices, and solutions. The business operates through the following segments: Productivity and Business Processes, Intelligent Cloud, and Personal Computing.
MSFT's earnings per share and revenue are expected to climb 15.9 percent and 18.4 percent year over year to $9.33 and $199.06 billion, respectively, in fiscal 2022. It outperformed Street earnings per share projections in each of the preceding four quarters. The stock has gained 11.5 percent year to year, closing at $285.26 in the most recent trading session.
MSFT's trailing-12-month gross profit margin and net income margin are 37.9 percent and 577 percent greater than the industry averages of 49.91 percent and 5.69 percent. Additionally, its trailing-12-month EBITDA margin of 49.12 percent and levered FCF margin of 25.14 percent, respectively, are greater than the industry norms of 13.78 percent and 10.06 percent.
The strength of MSFT's fundamentals is represented in its POWR Ratings. It receives an overall rating of B, which in our proprietary grading system equals a Buy. The POWR Ratings are obtained by weighing 118 different parameters optimally.
It receives an A for Sentiment but a B for Stability and Quality. It is placed #9 in the Software – Business industry, out of 61 stocks. Click here to view MSFT's Growth, Value, and Momentum ratings.
2. Fastly, Inc. (FSLY)
Fastly, Inc. plays an edge cloud platform to process, serve, and safeguard the applications of its customers.
Edge cloud computing is a subset of Infrastructure as a Service that enables developers to create, secure, and deliver digital experiences at the Internet's edge.
It is a programmable platform optimized for the delivery of Web and application content.
The company's edge network consisted of 68 points of presence located throughout the world.
It is a technology company that serves customers in the digital publishing, media and entertainment, technology, online retail, travel and hospitality, and financial technology services industries.
Fastly, Inc. was once known as SkyCache, Inc. and changed its name in May 2012 to Fastly, Inc. Fastly, Inc. was created in 2011 and is based in the San Francisco Bay Area.
3. Alphabet (GOOGL)
Alphabet is a company with a long track record of growth. Alphabet, like other successful technology companies, excels at diversifying its operations.
Investing in Alphabet is a low-risk proposition with the revenue generated by advertising, search products, and cloud services.
Additionally, Alphabet can expose you to edge computing via recent cooperation between Google Cloud, and AT&T. Google is collaborating with the mobile operator to construct a robust 5G network capable of supporting enterprises' edge computing capabilities.
This project would accelerate the adoption of edge computing and increase the value of Alphabet and AT&T stock as 5G networks became more widely available.
4. Limelight Networks, Inc. (LLNW)
Limelight Networks, Inc. provides content distribution and related services throughout the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
The company operates private networks that deliver Websites, mobile applications, videos, music, software, and APIs; it also provides live and on-demand video delivery services and online video platforms that assist organizations in managing, publishing, syndicating, analyzing, and monetizing video content.
Additionally, it provides edge cloud services and cloud security services that protect against malicious applications, Website attacks, unauthorized content access, and cloud storage services.
Additionally, the company offers professional services as well as other infrastructure-related services like transit and rack space.
It provides services to media enterprises in the television, music, radio, newspaper, magazine, film, gaming, software, social media industries, technology companies, and other businesses that conduct business online.
Limelight Networks, Inc. is based in Scottsdale, Arizona, and was formed in 2001.
5. Hewlett Packard Enterprise (HPE)
Thanks to its strong commercial computer and printer sales, Hewlett Packard is another technology stock to consider. HP is also developing edge computing technologies to help construct the workplace of the future.
HP developed the Aruba Edge Services Platform brand to provide artificial intelligence-powered solutions and automate edge computing applications.
Businesses can contact HP for consultancy services to assist them in implementing edge computing, and HP also offers security technologies to help secure the edge.
HP differentiates itself by providing solutions for integrating sensors and data for Internet of Things (IoT) devices. Additionally, you'll find hardware solutions that enable edge computing in hostile locations and items that support the circular economy by lowering energy usage and assisting organizations in meeting other sustainability goals.
In smart venues, HP edge computing technologies are already in use. By deploying edge computing at event venues, the technology company has created new ways of controlling events and providing current experiences.
6. Nvidia (Nasdaq: NVDA)
Nvidia was previously known largely as a vendor of graphics cards, and it has evolved into a leader in artificial intelligence in recent years. It has hundreds of distinct business segments, including software and hardware. This comprises a variety of edge computing solutions.
Nvidia is regarded as one of the most adaptable edge computing stocks. This is due to the fact that the company offers both hardware and software. In this regard, it is similar to Apple. Apple sells iPhones (hardware) but also controls the App Store (software), which allows users to download applications.
Nvidia's EGX Platform includes solutions for edge computing. This software suite includes hardware for speech recognition, business forecasting, and immersive graphics experiences. Nvidia also offers Nvidia AI Enterprise in addition to this gear. This package of tools can be used to rapidly deploy, manage, and scale AI workloads.
There are innumerable uses for edge computing technologies in general. On the other hand, Nvidia details five particular use cases on its website. Retail, manufacturing, healthcare, telecommunications, and smart cities are among the use cases, and Nvidia has acquired Bright Computing to bolster its solutions.
Nvidia announced yearly sales of $16.68 billion in the fiscal year 2021. Additionally, it reported a $4.33 billion profit. Nvidia's shares increased by about 98 percent in 2021. Additionally, it has increased by approximately 936 percent during the last five years.
7. Akamai Technologies (AKAM)
Akamai Technologies, Inc. provides edge cloud services for delivering, optimizing, and safeguarding content and business applications over the Internet in the United States and globally. Founded in 1998, the company is headquartered in Cambridge, Massachusetts.
It includes a Web Application Protector, which protects web assets against a web application and distributed denial of service attacks. A cloud-based security product called Kona Site Defender; Bot Manager to discover and categorize bots depending on their business or information technology effect; Edge DNS, which converts domain names in a human-readable format to numerical IP addresses; Site Shield, which stops attackers from directly attacking the application's origin and forces traffic through its network, where attacks may be identified and handled more easily; identity Cloud, a solution for managing customer identity access; Prolexic Routed provides protection for web- and IP-based applications; and Client Reputation assigns risk rankings to malicious IP addresses and enables customers to take action against specific clients.
Additionally, it includes Enterprise Application Access, which enables adaptive access to applications; Enterprise Threat Protector, which enables enterprise security teams to identify, block, and mitigate targeted attacks; and Enterprise Application Management. Ion, a suite of intelligent performance optimization tools and controls; Dynamic Site Accelerator, which accelerates and secures interactive websites; Image Manager, which optimizes online images automatically; CloudTest, which allows for load testing and other analysis of websites in a pre-production environment; and mPulse, which provides real-time website performance data to customers in order to improve their digital experiences.
The firm also offers Aura Managed CDN, DNS Infrastructure, and security and personalization services; adaptive delivery, download delivery, live media service, media analysis solutions; and NetStorage, a cloud storage solution.
It distributes its solutions via direct sales and service teams and through a network of channel partners.
8. One Stop Systems (OSS)
Since 1998, One Stop Systems has been in business. This firm specializes in providing the hardware that enables edge computing and artificial intelligence applications.
One Stop Systems differentiates itself by its AI-on-the-fly offerings. With edge computing AI products for a variety of industries, these technologies put AI capabilities in the hands of organizations.
OSS is an appealing investment opportunity due to the numerous applications of these products in a variety of industries, all of which have an excellent outlook.
Among One Stop Systems' clients are companies in the defense industry, the oil and gas sector, as well as mine operators. Additionally, there are applications for driverless vehicles, aerospace projects, as well as media and entertainment.
As more businesses embrace edge computing, the demand for high-performance hardware will increase. By delivering a combination of hardware and AI solutions, OSS is in a unique position to become the go-to partner for many enterprises investing in edge computing.
Conclusion
Edge computing, which originated in the massive cloud computing business, is likely to surpass total cloud growth in the next years. Edge computing is a long-term investment trend spawned by the enormous cloud computing business. Keep an eye out for new firms and potential initial public offerings (IPOs) in this industry. As is the case with most high-growth stocks, investing in edge computing companies is a risky proposition.
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