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2 Outperforming Edge Computing Stocks to Add to Your Portfolio

The tech industry may be challenged by the forthcoming interest rate hikes this year. But, given the ongoing rapid digitization, the edge computing industry should keep growing. Therefore, we think it could be wise to add quality edge computing stocks International Business Machines (IBM) and Hewlett Packard Enterprise (HPE) to one’s portfolio now. These stocks have outperformed the S&P 500’s returns so far this year and could continue to do so in the near term. Let’s discuss.

In today’s complex data-driven world, many companies are adapting edge computing to stay competitive. With rising demand for AI, the Internet of Things, and 5G services, edge computing’s popularity is expected to grow. So, despite the expected challenges that will be posed by coming interest rate hikes, the edge computing industry should continue growing.

According to Grand View Research, the global edge computing market is anticipated to reach $61.14 billion by 2028, growing at a 38.4% CAGR. Therefore, fundamentally strong edge computing stocks should deliver solid returns in the long run.

International Business Machines Corporation (IBM) and Hewlett Packard Enterprise Company (HPE) possess solid financials and have outperformed the S&P 500's 7.4% decline year-to-date.

International Business Machines Corporation (IBM)

IBM in Armonk, N.Y. provides integrated solutions and services worldwide. The company operates through four business segments: Software; Consulting; Infrastructure; and Financing. 

On Jan. 24, 2022, Arvind Krishna, IBM chairman and CEO, said, “Our fourth-quarter results give us confidence in our ability to deliver our objectives of sustained mid-single-digit revenue growth and strong free cash flow in 2022.”

IBM’s total revenue came in at $16.70 billion for the fourth quarter, ended Dec. 31, 2021, up 6.5% year-over-year. Its net income came in at $2.33 billion, up 72% year-over-year, while its EPS increased 70.2% year-over-year to $2.57.

IBM’s revenue is expected to grow at 5.9% year-over-year to $60.75 billion in 2022. And its EPS is also expected to grow 24.3% to $9.86 in 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 4.3% in price year-to-date to close yesterday’s trading session at $127.96.

IBM has an overall B rating, which equates to a Buy in our proprietary rating system.

In addition, it has a B grade for Value and Quality. IBM is ranked #16 of 77 stocks in the Technology - Services industry. Click here to see the additional POWR Ratings for IBM (Growth, Momentum, Stability, and Sentiment).

Hewlett Packard Enterprise Company (HPE)

HPE in Palo Alto, Calif., provides solutions that allow customers to seamlessly capture, analyze, and act upon data in the Americas, Europe, the Middle East, Africa, Asia- Pacific, and Japan. It delivers unique, open, and intelligent technology solutions as a service.  

On March 1, 2022, Tarek Robbiati, HPE’s EVP and CFO, said, "We are off to a strong start delivering against our FY22 commitments with our third quarter in a row of more than 20% year-over-year order growth bolstering our confidence for sustained revenue growth.”

HPE’s net revenue increased 1.9% year-over-year to $6.96 billion for its fiscal 2022 first quarter, ended Jan. 31, 2022. Its net earnings came in at $513 million, up 130% year-over-year. Also, its EPS came in at $0.39, up 129.4% year-over-year.

Analysts expect HPE’s revenue to be $28.63 billion in its fiscal year 2022, representing a 3.1% year-over-year rise. The company’s EPS is expected to increase 11.8% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 6% in price year-to-date to close yesterday’s trading session at $16.72.

HPE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.

HPE has a B grade for Value and Sentiment. It is ranked #9 of 54 stocks in the Technology - Communication/Networking industry. Click here to see the additional POWR Rating for Momentum, Growth, Stability, and Quality for HPE.

IBM shares fell $0.14 (-0.11%) in premarket trading Friday. Year-to-date, IBM has declined -3.11%, versus a -7.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.


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