Edge computing serves a global audience by prioritizing distributed infrastructure and micro-data centers that process and store digital resources. Edge computing solutions provide enterprise organizations with the necessary tools to keep pace with increasing data speeds.
According to International Data Corporation (IDC), worldwide spending on edge computing is expected to reach $176 billion in 2022, indicating a 14.8% year-over-year surge. Dave McCarthy, Research Vice-President for Cloud and Edge Infrastructure Services at IDC, said, “Organizations investing in edge computing combined with AI and modern application design will have an advantage when it comes to tackling whatever challenge comes next.”
With the global edge-computing market size projected to reach $55.93 billion by 2028, growing at a 31.1% CAGR from 2022 – 2028, Wall Street analysts expect the stocks Cloudflare, Inc. (NET), Fastly, Inc. (FSLY), and One Stop Systems, Inc. (OSS) to rally in price by more than 35%.
Cloudflare, Inc. (NET)
NET is a San Francisco-based cloud platform operator that delivers a range of network services to businesses internationally. The company’s offerings include an integrated cloud-based security solution that consists of a combination of platforms, including public and private cloud, Software-as-a-Service applications, and IoT.
On December 10, NET announced that it had joined Microsoft (MSFT) 365 Networking Partner Program (NPP). The collaboration would provide NET’s Zero Trust platform enhanced connectivity to MSFT’s 365 services, which might benefit NET.
On December 8, NET reported that it had acquired Zaraz, a third-party marketing and analytics tools impact reducing company. The acquisition should enhance the company’s operational capacity.
NET’s revenue increased 51% year-over-year to $172.35 million in its fiscal third quarter, ended September 30. Its non-GAAP gross profit improved 54.8% from the prior-year period to $136.56 million. Its non-GAAP income from operations and non-GAAP net income stood at $2.23 million and $1.35 million, respectively, up substantially from their negative year-ago values.
The Street’s $0.01 EPS estimate for the fiscal year 2022 indicates a 120% year-over-year increase. And the Street’s $884.96 million revenue estimate for the same year reflects a 36.7% rise from the prior year. Furthermore, NET has an impressive surprise earnings history; it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 11.8% in price over the past year and 5.3% intra-day to close yesterday’s trading session at $93.28.
The 12-month median price target of $163.38 indicates a 75.2% potential upside. The price targets range from a low of $100.00 and a high of $250.00.
Fastly, Inc. (FSLY)
San Francisco’s FSLY is an edge-cloud platform used for processing, serving, and securing customer applications internationally. The company serves customers in digital publishing, media and entertainment, online retail, travel, and fintech services industries.
On December 15, FSLY announced the launch of Origin Inspector, an origin-to-edge real-time visibility product that is accessible via Fastly’s user interface and API. The product is aimed at removing logging dependency on third-party data collectors and should add to the company’s revenue stream.
For its fiscal third quarter ended September 30, FSLY’s revenue increased 22.8% year-over-year to $86.74 million. Its non-GAAP gross profit came in at $49.86 million, representing a 17.9% improvement from the prior-year quarter.
The Street expects FSLY’s EPS to increase 13% year-over-year in its fiscal year 2022. And the Street’s $421.26 million revenue estimate for the same period indicates a 20.5% rise from the prior year. In addition, FSLY has beaten consensus EPS estimates in three of the trailing four quarters, which is impressive.
FSLY’s shares have declined 0.4% intra-day to close yesterday’s trading session at $28.00.
Wall Street analysts’ 12-month median price target of $38.00 indicates a 35.7% potential upside. The price targets range from a low of $25.00 to a high of $50.00.
One Stop Systems, Inc. (OSS)
OSS is a designer, manufacturer, and marketer of high-performance computing modules and systems for edge deployments globally. The Escondido, Calif.-based company’s systems are built using graphical processing unit (GPU) and solid-state flash technologies.
On November 16, OSS unveiled its flagship AI Transportable compute server, Rigel Edge Supercomputer. Regarding this, David Raun, President and CEO of OSS, said, “As our most compact and powerful AI Transportable compute server, we believe the Rigel Edge Supercomputer will transform the use of real-time AI for the most demanding vehicle, maritime and aerospace applications at the edge.”
OSS’ revenue increased 23.2% year-over-year to $15.98 million in its fiscal third quarter, ended September 30. Its adjusted EBITDA rose 15.7% from the prior-year quarter to $1.81 million. And its non-GAAP net income and non-GAAP net income per share came in at $1.54 million and $0.08, respectively, up 24.6% and 14.3% from the same period the prior year.
The $0.07 consensus EPS estimate for the fourth fiscal quarter (ended December 2021) represents a 600% year-over-year improvement. And the $17.08 million consensus revenue estimate for the same quarter reflects a 22.6% rise from the prior-year period.
Over the past year, OSS’ stock has declined 1.3% to close yesterday’s trading session at $3.95. The 12-month median price target of $8.00 indicates a 102.5% potential upside.
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NET shares were trading at $84.50 per share on Tuesday afternoon, down $8.78 (-9.41%). Year-to-date, NET has declined -35.74%, versus a -9.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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