Big data has been an absolute buzzword this past decade or so. It’s used to describe massive structured and unstructured data sets that cannot be processed by traditional methods. The term sprung up mainly because of the sheer volume of data created in the digital space each year. In fact, some forecasts suggest that there will be as many bits of data as there are stars in the sky. The market will grow at a compound annual growth rate (CAGR) of over 10.6% between 2020 and 2025, reaching a $229.4 billion value. As such, with the sector’s dazzling potential, big data stocks present one of the more lucrative investment options for investors.
Big data companies are working on various transformational technologies that deal with machine learning, predictive analysis, data storage and other areas. Combine that with the exponential growth we’ll see in the coming years and these companies are essentially revolutionizing the way we live, work and think.
So, how can you get in on that revolution? Here are seven of the industry’s needle-movers that could be your entry into the space:
- Splunk (NASDAQ:SPLK)
- Microsoft (NASDAQ:MSFT)
- Palantir (NYSE:PLTR)
- IBM (NYSE:IBM)
- SAP SE (NYSE:SAP)
- Salesforce (NYSE:CRM)
- Amazon (NASDAQ:AMZN)
Big Data Stocks to Buy: Splunk (SPLK)
Splunk is an enterprise software platform providing on-premises and cloud solutions to its customer base. Additionally, it provides various solutions to its customers in retrieving, monitoring and evaluating big data. The company’s ultimate aim is to develop and tailor its “data-to-everything platform” to meet its users’ major needs.
With its impressive partner base comprising several Fortune 100 companies, SPLK stock is one of the more attractive sector investments when it comes to big data stocks.
This is especially true as the company has done well on earnings, too, missing analyst estimates only a couple of times in the past 20 quarters. Splunk has also been on an acquisition spree recently, working to expand its competencies in security, IT and observability. These fast-evolving segments will likely become major growth catalysts for the company in the future.
Tech giant Microsoft has been one of the major players out of the big data stocks this past decade. The company first started in the area with a partnership alongside Apache Hadoop, an open-source provider of software utilities for big data processing. Hadoop’s integration with Microsoft’s Azure cloud platform was the company’s perennial entry into the space. Hence, big data and cloud services will likely be a huge part of its future success.
Needless to say, the company wants a sizeable slice of the pie, which is why it continues to invest in unique capabilities to the sector. Its acquisition policy has also paid off, particularly in this segment. For example, Microsoft acquired Revolution Analytics, an R-language and data science specialist, back in early 2015. Moreover, it has recently formed alliances with big data tech companies like genomic expert Illumina (NASDAQ: ILMN) and computer memory company Western Digital (NASDAQ:WDC).
So, with its cloud platform investments and big data offerings, MSFT stock will surely continue to provide healthy returns.
Palantir is one of the top big data analytics companies in the world. It has two primary segments: government and commercial. However, its government segment is what is currently grabbing the attention of investors.
Recently, the company won a $91 million intelligence contract with the U.S. Army. Additionally, it was rewarded a $44 million contract with the U.S. Food and Drug Administration (FDA) and another $36 million contract with the National Center for Advancing Translational Sciences (NCATS). These recent positive developments have helped propel Palantir’s market capitalization to well over $48 billion, making PLTR stock an exciting bet in its industry.
What’s more, the company’s commercial segment is also showing a lot of promise and, in many ways, has just been overshadowed by the success of its government segment. For instance, PLTR recently re-signed a $300 million contract with a large aerospace customer.
Back in 2019, the company’s revenues increased by 25%. Now, it’s expecting a healthy 44% growth this year. So, Palantir is clearly rapidly growing its business and expanding its total addressable market (TAM) each passing year. That makes it one of the more compelling big data stocks.
Legacy tech giant IBM’s focus never started out in “Big Data.” However, in sensing the market’s massive potential, it began investing heavily in business analytics and developing its cloud services. Today, big data is at the core of its services and woven throughout its product portfolio. In 2019, its cloud and global business services generated roughly $39.8 billion in revenue combined, becoming a major growth driver for IBM stock (Page 93).
So, the company’s products are now optimized for AI, big data and cloud services. Similar to Microsoft, it is also betting big on its hybrid Hadoop ecosystem to offer users some of the most cost-effective and flexible data tools. IBM continues to build on its analytics repertoire, too, launching Cloud Pak, “an integrated set of AI-infused software solutions for hybrid cloud” focused on business workflows.
Hence, IBM is one of the major players in big data stocks. It will continue to benefit from its investments in the field for the foreseeable future.
SAP SE (SAP)
Next on my list of big data stocks is the enterprise resource planning (ERP) software provider SAP, a company that forayed into the space with its HANA tools.
These data analytics tools allow its users to analyze and gather massive amounts of data in making better decisions. Moreover, they are integrated with Hadoop’s tools and provide consolidated offerings to its customer base. With each passing year, the company continues to add some big names to its subscriber list. As such, big data has become a significant growth driver for SAP stock, on top of its hugely successful ERP business.
In 2019, the company’s tally of SAP S/4HANA users was at 13,800. In its most recent quarter, though, it added another 500 users and took that tally up to 15,100. The company’s S/4HANA solution provides an array of big data processing options and unparalleled business agility to its users. Surely, this will drive the growth we’re already seeing even further.
Salesforce is one of the world’s leading cloud-based customer relationship management (CRM) companies and is leveraging big data to add more muscle to its product offerings.
In 2014, the firm launched its Wave analytics platform and later its New Wave Actions the following year, emphasizing actionable big data. However, its 2019 acquisition of Tableau — a data visualization software company — is the most significant development in its big data repertoire. With a 12-month return of 37.3%, CRM stock is one of the best performing big data stocks this year.
The company’s “platform and other” division — which includes its big data analytics tools — is now its top segment in revenue. The $4.4 billion generated from the sector accounted for 30.8% of its revenue for the nine months ended on Oct. 31. The segment grew by a whopping $1.4 billion from the same period in 2019.
With effective integration in its product portfolio, big data will continue to play an integral role in CRM’s growth.
Online retail giant Amazon is one of the largest companies globally, a feat which is largely thanks to its ability to work with tons of data. In practice, the company analyzes extensive information collected from its customer base and provides accurate predictions about their preferences. The overall goal is to provide a better service to consumers through a search engine that continually evolves with data. Hence, big data has played a huge role in AMZN stock’s lofty 12-month returns of nearly 77%.
In fact, big data is intertwined in virtually every facet of Amazon’s business — but perhaps none more so than its cloud segment. Amazon Web Services (AWS) provides an array of data analytics tools for its users in addition to a centralized and secured data repository. This pool of data was built in 2019 and is known as the Galaxy data lake, allowing users to effectively manipulate different data sets using analytics and machine learning services.
So, when it comes to big data stocks, Amazon is in the top tier. Big data is inseparable even from its e-commerce business and will continue to play a major role in the company’s massive success moving forward.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. He does not directly own the securities mentioned above.