With more than a decade of rapid cloud expansion, the next wave of data center-driven computing is now underway: finite computing. Simply put, edge computing removes data from a centralized cloud to a more localized data center, speeding up the time it takes for the user to receive the requested information (for example, when a web connection is clicked) and reducing the amount of data traveling through the Internet infrastructure .
Over the next decade, it is expected to grow well to double-digit rates, with global end-user costs creating new investment opportunities. There are three stocks worth buying right now Verizon Communications (NYSE: VZ),, Limelight Networks 09.30 NASDAQ: LLNW, and Akamai Technologies 09.30 NASDAQ: AKAM.
Wireless networks, the best investment game in the end?
Nicolas Rosolilo (Verizon): Over the years, connections between cordless phones and Internet services have been blurred and new 5G networks are on track to continue this trend. America’s largest wireless service provider, Verizon, recently released its version of 5G nationwide – behind national deployments in T-Mobile and AT&T – and extended its millimeter wave 5G (charged as a competitor to broadband) to parts of 55 cities.
What are these 5G calls for finite calculations? While wireless, enabling communications and web services, is the end product for you and me, Verizon and its peers are working hard to build an behind-the-scenes infrastructure to make ultra-fast wireless available. Beyond the cell towers themselves, new optical lines need to be launched and localized data centers built to handle web traffic. And while the 5G race is still in its infancy, Verizon is spending cash to make new end-net capabilities possible – expected from $ 17.5 billion to $ 18.5 billion this year alone.
The cost of upgrading the network is expected to allow more than amazing fast video streams to your smartphone. Even in its flagship 4G LTE network, Verizon powers connected fleet services, industrial equipment, smart home devices and urban services such as traffic lights and cameras. And as technology improves, 5G, backed by computing technology, can help develop autonomous vehicles, robotics and other AI applications.
Of course, Verizon is not a growth stock. But as marginal computing grows, I still like America’s flagship network. Even with the high cost of improving its ability to move data efficiently, it is a profitable company that has generated more than $ 21 billion in free cash flow (revenue less operating and capital costs in cash) in the past year. And since the shares are traded only for 11 times the subsequent 12-month free cash flow and pay a dividend yield of 4.3%, I think this is a worthy place to start building an investment portfolio for modern calculations.
This CDN expert wants to steal the attention of the computational edges
Anders Baylund (Limelight Networks): This content delivery network operator (CDN) may not be the first name that comes to mind when researching endpoint computing, but Limelight Networks is stealing a march for competition in this market.
First, Limelight’s CDN services for bread and butter play an important role in the rapid delivery of digital media and large downloads globally. The company uses hundreds of routers to accomplish this task. But this is not exactly a situation with computer calculations and is not the reason I choose Limelight today.
You see, the company is making a significant investment in equipping its edge routers with local computing horsepower to enter the door of the nascent computing market. CEO Bob Lento sees an addressable end to the computing market that is much larger than the CDN space.
“If you stick to the figures provided by analysts, this is many times the CDN market. How much of this is addressed to our customer base remains to be seen,” Lento said in a call for earnings for the second quarter of July. “No matter how we try to cut it, it always turns out that the end-market is bigger than the CDN market.”
Edge computing is a new addition to Limelight’s product portfolio and does not yet contribute significantly to the company’s top or bottom lines. Here we look at the mechanism for long-term growth of Limelight, hidden under a more visible layer of successful CDN operations. The stock has doubled in the last year as the company helped several streaming video services spread their wings during the pandemic blocking era – a perfect storm that would give Limelight more assets and operational freedom to explore high-octane growth ideas as the ultimate. design calculations.
Adhering to the leader in computer technology
Billy Duberstein (Akamai Technologies): To play finite calculations, I set up the largest content delivery network out there at Akamai Technologies. While ahead of rival Fast receives much of the advertising, Akamai makes three times the profits that Fastly will realize income this year. Akamai is also an emerging leader in cloud security solutions, a fast-growing segment that will become increasingly important as computers are pushed to the edge of distributed networks.
Over the past quarter, customers have trusted Akamai to provide more than 100 terabits per second in 135 countries, powered by more than 300,000 servers in more than 4,000 locations, with nearly 1,500 network partners around the world – leaps and bounds ahead of competitors. This scale and trust has earned Akamai 220 from the world’s leading OTT broadcasting companies as customers, as well as 24 of the 25 most popular video game publishers.
And despite its large size, Akamai is still experiencing solid growth and expanding margins. In the last quarter, Akamai increased its revenue by 12.7% to $ 795 million, while operating income increased by an even more impressive 40.2% to $ 190 million. Akamai is particularly benefiting from the increase in media and customer traffic, which grew by 19% as people were glued to social media and television streaming in the second quarter affected by the pandemic. An even higher growth segment for Akamai was cloud security solutions, which rose 27% to $ 259 million. Management stressed that Akamai had protected a large bank and a large Internet service provider from “two of the biggest attacks ever seen.”
While some may think that size can limit returns, the move to 5G and fast, secure communications due to the pandemic should provide enough backwind for the entire CDN and cybersecurity industry. In addition, during a conference call with analysts for the second quarter, management said it had actually earned a share of traffic during the quarter. The CDN market is still quite fragmented, which means that even the biggest player has the opportunity to increase its market share.
Akamai, meanwhile, trades for a rather undemanding 2021 2021 earnings forecast, making it a much better value than Fastly and other potential starters.