Insights and predictive analytics solutions derived from big data tend to create smart processes and smarter organizations. Hence, organizations are increasingly adopting big data solutions. Cloud computing has made the adoption of big data solutions easier and more affordable. Also, the widening of the business analytics market and the emergence of IoT are powering the growth of the big data market. The global big data market is expected to reach $268.4 billion by 2026, registering a 12% CAGR.
Big data management and analytics software company, Palantir Technologies Inc. (PLTR), generated a 35.5% year-over-year increase in revenue to $392.15 million in its last reported quarter. However, its stock has declined more than 15% in price since the company reported its third-quarter results on November 9. Citi analyst Tyler Radke said that PLTR’s decelerating growth "came into center view" in the third quarter, with weakness in both commercial and government. The stock is currently trading below its 50-day and 200-day moving averages, indicating a downtrend. Furthermore, analysts expect its EPS to decline 25% in the current year.
Therefore, we think fundamentally sound big data stocks SAP SE (SAP) and International Business Machines Corporation (IBM) could be better picks to cash in on the industry’s growth. These stocks are rated 'buy’ in our proprietary rating system.
Click here to check out our Cloud Computing Industry Report for 2021
SAP SE (SAP)
Headquartered in Walldorf, Germany, SAP is a global enterprise software company. The company operates through four segments—Applications, Technology & Support; Concur; Qualtrics; and Services. SAP markets and sells cloud offerings developed by SAP Ariba, SAP Fieldglass, and Concur and provides cloud-based business networks and services relating to the SAP Business Network. Also, the company offers services in the Final, Public, Consumer, Energy and Resources and other sectors.
This month, SAP introduced new products and services in its SAP TechEd to empower citizens and professional developers to accelerate digital transformation. With the aid of these new products and services, the company should be able to serve customers with the exact solution they need.
During the third quarter, ended September 30, 2021, SAP’s total revenue increased 4.7% year-over-year to €6.85 billion ($7.74 billion). The company’s revenue under the Cloud segment grew 20.2% from its year-ago value to €2.39 billion ($2.7 billion). Its operating profit rose 1.6% from the prior-year quarter to €2.1 billion ($2.38 billion). Also, the company’s EPS increased 2.4% year-over-year to €1.74 ($1.96).
SAP’s revenue for the fiscal year 2022 is expected to increase 4.5% year-over-year to $32.72 billion. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to increase 7.8% in the current year. SAP’s stock has advanced 21.4% in price over the past year.
SAP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Sentiment, and a B grade for Quality and Value. We have also graded SAP for Momentum, Stability, and Growth. Click here to access all of SAP’s ratings. SAP is ranked #9 of 163 stocks in the Software – Application industry.
Click here to check out our Software Industry Report for 2021
International Business Machines Corporation (IBM)
IBM, which is headquartered in Armonk, N.Y., is a multinational information technology corporation that offers cloud computing, artificial intelligence, data analytics, IoT, IT infrastructure, digital workspace, and cybersecurity. The company also provides hosting and consulting services in areas ranging from mainframe computers to nanotechnology and operates in over 171 countries.
This month, IBM introduced its new 127-quantum bit ‘Eagle’ processor and announced its plans for IBM Quantum System Two, representing the next generation of quantum systems. Through this introduction, IBM should be able to showcase its milestone development in quantum hardware and software. Also, IBM believes the processor should enable quantum computers to outperform classical computers for useful applications in the future.
IBM’s total revenue for the third quarter, ended September 30, 2021, increased 0.3% year-over-year to $17.62 billion. The company’s revenue under the cloud and cognitive software segment grew 2.5% from its year-ago value to $5.69 billion. Its gross profit came in at $8.17 billion. Also, the company’s net income amounted to $1.13 billion for the period.
IBM has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 11.9% in the current year. Furthermore, the stock has gained 0.3% in price over the past year.
It is no surprise that IBM has an overall B rating, which equates to Buy in our proprietary rating system. Also, the stock has a B grade for Momentum, Value, and Quality. We have also graded IBM for Sentiment, Stability, and Growth. Click here to access all of IBM’s ratings. IBM is ranked #8 of 52 stocks in the Technology – Hardware industry.
Click here to check out our Cloud Computing Industry Report for 2021
SAP shares fell $1.08 (-0.76%) in premarket trading Thursday. Year-to-date, SAP has gained 9.37%, versus a 26.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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