Big data is a generic term that describes a large volume, velocity, veracity, and variety of structured and unstructured data sets that cannot be processed by traditional methods. These data sets are often perceived as a double-edged sword: costly to gather and maintain but filled with immense potential. When analyzed by a set of technologies, these large sets of data can reveal patterns or trends.
Major business organizations are investing in big-data business intelligence to gain insights from their disconnected systems, databases, applications, and spreadsheets. By leveraging data analytics, artificial intelligence, and machine learning, big data can deliver substantial competitive advantages.
The use of big data cannot be ignored. According to MarketsandMarkets, the global big data market size is expected to grow at a CAGR of 10.6%, from $138.9 billion in 2020 to $229.4 billion by 2025.
Hence, big-data stocks present one of the more lucrative investment opportunities, we think.
Here is a rundown on four big data stocks that stand to benefit significantly even in a post-pandemic market due to the current, accelerated digitization trend: Microsoft Corporation (MSFT), Amazon.com, Inc. (AMZN), International Business Machines Corporation (IBM) and Domo, Inc. (DOMO).
Microsoft Corporation (MSFT)
MSFT develops, licenses, and supports software, services, devices, and solutions that, enable companies’ digital transformation in the era of cloud computing. The company offers Azure, a public cloud computing platform with solutions including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). These can be used for services such as analytics, virtual computing, storage, and networking. MSFT operates primarily through three segments – Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
MSFT recently announced a global collaboration with Johnson Controls International (JCI), a global leader in smart and sustainable buildings, to integrate OpenBlue Digital Twin and Azure Digital Twins. The solution aims to encompass the entire ecosystem of building and device management technologies with digital cloud technologies.
In its fiscal first quarter that ended September 30, 2020, MSFT’s revenue surged 12% year-over-year to $37.2 billion on the back of commercial cloud revenue, which was $15.2 billion, up 31% year-over-year. Server products and cloud services revenue increased 22% driven by Azure revenue growth of 48%. EPS came in at $1.82, rising 32% compared to the year-ago quarter.
The combination of Azure Synapse Analytics and Azure Purview facilitates organizations’ capacity to achieve both analytical power and predictive power with respect to data sets. MSFT is benefitting immensely from a massive acceleration in digital transformation across businesses. Analysts expect its current-year revenue and EPS to rise 10.7% and 17.4%, respectively, compared to the year-ago value.
How does MSFT stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Industry Rank
A for Overall POWR Rating.
It is ranked #1of 98 stocks in the Software – Application industry.
Amazon.com, Inc. (AMZN)
AMZN engages in the retail sale of consumer products and subscriptions through its online store. The company operates through three segments – North America, International, and Amazon Web Services (AWS). The AWS segment provides a broad and fully integrated portfolio of cloud computing services to help build, secure, and deploy big data applications.
On December 15, AWS signed a multi-year deal with Twitter (TWTR) to provide global cloud infrastructure to deliver Twitter timelines. This month, AMZN has also agreed to provide its AWS services to Star Alliance, the world’s largest airline alliance; Nationwide, an insurance and financial services major; Thomson Reuters, a leading global provider of business information services, and the automobile giant, BMW Group. AWS also launched Amazon HealthLake this month. It enables healthcare organizations to store, transform, and analyze their data in the cloud.
Net sales have increased 37% year-over-year to $96.1 billion in the third quarter ended September 30, 2020. The AWS segment witnessed 29% year-over-year growth, contributing $25.2 billion to the top-line. During the quarter, AWS announced the general availability of Amazon Braket, a fully managed service that provides a development environment to help customers explore quantum algorithms. The company also announced the availability of Amazon Timestream, a new time series database for IoT and operational applications. Consequently, EPS came in at $12.37, nearly tripling from the year-ago value of $4.23.
Big data plays a huge role in AMZN’s e-commerce operations because it analyzes extensive information collected from its customer base and provides accurate predictions about their preferences. AWS has gained significant customer momentum with new commitments and migrations, thanks to the COVID-19 pandemic. As a result, the company’s current year revenue and EPS is expected to grow 35.5% and 51.7%, respectively, year-over-year.
AMZN’s POWR Ratings reflect a promising outlook. It has an overall rating of “Buy” with an “A” for Industry Rank, and a “B” for Trade Grade and Buy & Hold Grade. Among the 61 stocks in the Internet industry, it is ranked #18.
International Business Machines Corporation (IBM)
IBM operates as an integrated solutions company that provides information technology (IT) products and services worldwide. It operates through six segments – Cloud & Cognitive Software, Global Business Services, Global Technology, Systems, Global Financing, and Other. The company offers IBM Cloud Pak, an integrated set of AI-infused software solutions for hybrid cloud that help businesses to predict and shape future outcomes and automate complex processes.
IBM recently acquired a Montreal-based fintech company, Expertus Technologies Inc., to strengthen its portfolio. Expertus is an end-to-end digital payments’ solution provider. The acquisition further advances IBM’s hybrid cloud and AI strategy. Moreover, IBM collaborated with the Alliance to End Plastic Waste last week; it will design a new data platform hosted on IBM Cloud to help track plastic waste and recovery globally.
Despite a 2.6% top-line decline year-over-year to $17.6 billion, IBM’s third quarter results did not fail to impress the Street. Total cloud revenue was up 19% to $6 billion, while the Cloud & Data Platforms grew 20% year-over-year led by Red Hat. EPS for the quarter came in at $1.89, relatively stable compared to the year-ago value of $1.87.
The company is developing its hybrid Hadoop ecosystem to offer users some of the most cost-effective and flexible data tools. Commercial distributions of Hadoop are currently offered by four primary vendors of big data platforms – Cloudera, Hortonworks, AWS and MapR Technologies. Big data and analytics are at the center of IBM’s core business initiatives. In line with its progress there, analysts anticipate IBM’s EPS to rise 38% next year.
IBM is rated “Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, and a “B” for Industry Rank. It is ranked #13 of 30 stocks in the Technology – Hardware industry.
Domo, Inc. (DOMO)
DOMO operates a cloud-based platform specializing in business intelligence tools and data visualization. Its platform digitally connects the people, data, and systems in an organization, giving them access to real-time data and insights, and allowing them to manage business from smartphones.
True Influence, a technology leader of intent-based sales and marketing solutions, has recently chosen DOMO’s cloud-based platform as a single source of accuracy for internal decision making. Moreover, DOMO is part of the Smartronix Team in supporting the launch of the Pandemic Response Accountability Committee’s (PRAC) public website, using its analytical and BI platform to drive public engagement and provide insight into the use of CARES Act funds.
In its fiscal third quarter that ended October 31, 2020, total revenue increased 20% year-over-year to $53.6 million. Subscription revenue grew 24% compared to the prior year, representing 87% of the total revenue. Billings were $55.7 million, rising 25% year-over-year. However, DOMO reported a loss of $0.75 per share, although this was an improvement from the year-ago loss of $1.05 per share.
The company’s management believes that DOMO has more growth ahead, and in its third-quarter letter to shareholders it said: “Our strong results and our improved financial position give us the confidence to invest in the significant growth opportunity in front of us.” Consequently, analysts expect current year revenue and EPS to rise 19.6% and 50.5%, respectively, year-over-year.
It is no surprise that DOMO is rated a “Strong Buy” in our POWR Ratings system. It also has an “A” in Trade Grade, Buy & Hold Grade and Peer Grade. It is ranked #19 of 48 stocks in the Software – Business industry.
Want More Great Investing Ideas?
MSFT shares were trading at $219.84 per share on Monday morning, up $1.25 (+0.57%). Year-to-date, MSFT has gained 40.88%, versus a 15.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|MSFT||Get Rating||Get Rating||Get Rating|
|AMZN||Get Rating||Get Rating||Get Rating|
|IBM||Get Rating||Get Rating||Get Rating|
|DOMO||Get Rating||Get Rating||Get Rating|