The 1 Big Industry Investors Should Watch In 2022

Cloud computing was highly lucrative for investors over the last decade, but could this rising industry be set to take over the tech sector?

Dec. 27, 2021

The past year has seen the rise and fall of many industries. Stay at home stocks continued to balloon, before dropping suddenly as the world finally began to reopen. We saw the resurgence of health and travel stocks before they retreated once again. Electric vehicle (EV) stocks seemed to be hitting new all-time highs on a near-weekly basis at one point. One industry that seemed to consistently perform well, however, was cloud computing. 

Now, it doesn’t take a financial genius to tell you that cloud computing has potential for growth in 2022. However, cloud computing really came to the fore as a disruptive industry in the 2010s. Now, as we emerge from the pandemic that has marred the beginning of the 2020s, we’re looking to a similar industry to once again disrupt the tech sector – and that industry is edge computing.

What is Edge Computing?

Edge computing and cloud computing are very closely linked, despite solving problems in different ways. Cloud computing focuses on storing data and hosting software in centralized locations that users can connect to via the internet. Edge computing, however, takes this data and software out of the cloud entirely and moves it closer to the end-user.

Instead of data processing occurring in massive data centers, it can take place natively in ‘edge’ devices, which are located much closer to the user. Examples of these could include your phone or your smartwatch. These devices are part of the Internet of Things (IoT), a massive group of connected devices that will be capable of enabling edge computing.

This relocating of data processing comes with a number of impressive benefits. Chief among these is the reduction of latency, or the time it takes for information to be sent. This, coupled with a decrease in internet traffic resulting from decentralizing from the cloud, can massively boost network performances for businesses and customers alike.

Why is Edge Computing so important?

The reason this is so important is that edge computing can help facilitate new technologies such as autonomous cars and even the rollout of 5G networks. By reducing the time it takes to transmit messages, we make these innovative processes inherently safer. By decreasing processing time, these technologies can make decisions almost instantaneously. This is vitally important for industries like autonomous cars, where delayed processing of information could very well be the difference between life and death.

How can I invest in Edge Computing?

There are numerous ways to invest in edge computing.

It remains intrinsically linked to the cloud (for now), so the giants of cloud computing all support edge-based technologies. As such, companies like Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG) will give you direct exposure to edge computing.

Likewise, businesses such as IBM have already begun to put specific focus on edge computing. The company has recently announced a spin-off named Kyndryl which will have edge tech as one of its primary focuses. This will definitely be an area to watch closely for investors as more and more companies pour resources into edge computing.

Edge computing also requires a pointed focus on hardware. This means that semiconductor giants such as Nvidia and Intel could be poised to profit handsomely from the industry shift away from the cloud.

A final way to add edge computing to your portfolio is to search for ETFs that target the industry. The ARK Next Generation Internet ETF invests specifically in rising internet trends. If edge computing continues to develop in the way it has thus far, it could end up taking up a solid position in this fund.