Do you know Splunk? It's a company -- in the scaldingly hot realm of big data -- whose name is derived from "spelunk," which the company uses as a metaphor for locating something in a giant, dark cave. Splunk helps clients track usage to shore up weaknesses in electronic systems, while also extracting meaning from massive repositories of digital information. Its revenues have jumped 10- fold in four years, though the company has yet to record profits. Even as the Nasdaq surged 33% over the past year, Splunk's stock has jumped 150%.
"Big data" is a bit like "the cloud" a few years ago: Simply having the moniker attached to a company means that not only is it in a growth area, but it's also likely blessed with a stock market premium. For investors that means risk -- in the form of high prices and nascent companies with uncertain futures -- but also opportunity. Consolidation is afoot, and tech behemoths are snapping up big-data outfits. Smart investors can benefit.