U.S. Markets closed

5 Tech Stocks to Benefit From Growing EdTech Market in 2020

Chandrima Sanyal

Over the last decade or so, the education industry has put in a lot of efforts to leverage technology as a medium of education and training. Today, a student can study a subject online, upload his homework and learn chemistry (or any subject) through 3D immersion, thanks to educational technologies.

The e-learning market is all the more attractive because of the cost efficiencies it offers. Money allocation is channelized from rent, maintenance, electricity and transport arrangement for staff and students to educational elements such as smart learning software for tailored lessons, or innovative digital content such as video materials. Thus, the booming e-learning industry is boosting the EdTech market, paving the way for growth of educational software companies.

Analysis and predictions by research firms substantiate the expected growth of the EdTech market. Per HolonIQ, total global education expenditure is expected to reach $8 trillion for 2025. Within this, education technology expenditure, driven by AI, is expected to reach $341 billion by 2025. Education-focused AI expenditure itself is likely to be hit $6 billion by 2025.

The advent of EdTech is climbing most rapidly in Asia. The Asian education system is the biggest in the world thanks to a greater number of younger people in the continent than anywhere else in the world. For instance, Indian EdTech start-ups saw $690 million in funding from the United States, 22% of which was bagged by Byju’s, making it the first Indian EdTech player to become the unicorn.

Growing Relevance of Big Data, AI, ML in EdTech

The proliferation of EdTech has also provided educators and academicians with better access to data on individual achievements and progress. This has led to the emergence of Learning Record Stores, containing permanent documentation of what they’ve learnt and achieved, which they can carry from one institute to another.

Data analytics’ entry into education has boosted adaptive learning, with which, learning programmes can be personalized and knowledge gaps can be bridged.

Moreover, companies worldwide are integrating AI, AR/VR, ML and IoT technologies into the education sector to deliver an enhanced learning experience.

For instance, Amazon AMZN has taken a number of initiatives to strengthen the educational skill set of Alexa. Further, Alphabet’s GOOGL Google and Apple AAPL are enhancing Google Assistant and Siri, respectively, for classrooms.



 

Companies Poised to Gain

Here we zero in on five stocks, which are poised to benefit immensely with their expertise and efforts in the EdTech market.

A key player is Instructure INST, which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its focus on development of cloud-based learning management system and contribution to e-learning has pushed the company to the top within only a little more than a decade of its inception. Presently, Instructure’s most popular education software, Canvas, is used by more than 18 million users worldwide.

Cisco CSCO has continuously transformed education software with innovations and endeavors to develop and improve virtual classrooms. Among the most popular educational software tools for students are Digital Education Platform, Webex, and Cisco Spark Board. By having provided educational technology support to more than 24,000 institutions, the company expects to spread its EdTech roots to more than 1 billion people by the end of 2025. The company carries a Zacks Rank #3 (Hold).

Google has been a frontrunner in this market, thanks to its Chromebook. It recently unveiled the iOS version of Socratic, which is a mobile learning app acquired by the company last year. Further, the Zacks Rank #3 company rolled out an educational app called Bolo in India’s EdTech space, which holds immense opportunities. Bolo aims to inculcate the habit of reading among elementary school students. Moreover, Google’s Workbench buyout, which provides an online library of lessons and projects to be used in classrooms, remains a major positive.

Amazon is also gaining steam in the space for some time now. This Zacks Rank #3 company offers a reading app for children called Amazon Rapids. Also, the company recently launched an IIT JEE preparation app, JEE Ready, to expand its presence in India’s EdTech space. Moreover, AWS offers an open education resource platform, Amazon Inspire, which is a warehouse of digital resources for teachers, parents and students.

Apple also supports mobile learning and enables students and teachers to share and distribute education-related materials through iTunes U. Further, the iPhone-maker, which carries a Zacks Rank #3, offers a wide range of third-party learning apps through its App Store. Earlier this year, in the International Society for Technology in Education (ISTE) Conference, the company highlighted the creative capabilities on iPad, promoting the Everyone Can Create collection of educational resources.

Conclusion

The importance of EdTech also lies in its ability to democratize education by equalizing standards and enabling access for all. Online platforms, mobile applications, etc., have been instrumental in helping education penetrate deeper into society.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>