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In today’s rapidly evolving technological landscape, cloud computing has emerged as a cornerstone of digital transformation. As businesses and individuals increasingly rely on cloud-based services for storage, computing power, and software applications, the cloud computing industry continues to experience exponential growth. For investors seeking to capitalize on this trend, cloud computing stocks offer an exciting opportunity to participate in the future of technology.

Key Takeaways:

• Cloud computing is a rapidly growing industry driven by digital transformation and the increasing demand for scalable and cost-effective solutions.
• The top seven cloud computing stocks are Amazon (AMZN), Microsoft (MSFT), Google (GOOGL), IBM (IBM), Oracle (ORCL), Salesforce (CRM), and Adobe (ADBE).
• These companies offer a wide range of cloud computing services, including infrastructure as a service (IaaS), platform as a service (PaaS), software as a service (SaaS), and cloud-based software solutions.

What is Cloud Computing?

Cloud computing refers to the delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale. This technology enables businesses and individuals to access powerful computing resources without the need for on-premises infrastructure.

Key Components of Cloud Computing:

• Infrastructure as a Service (IaaS)
• Platform as a Service (PaaS)
• Software as a Service (SaaS)
• Serverless Computing
• Edge Computing
• Multi-Cloud and Hybrid Cloud Solutions

Market Potential and Growth Projections

The cloud computing market has been experiencing remarkable growth, and this trend is expected to continue in the coming years. Consider the following statistics:

• According to Gartner, the global public cloud services market is projected to reach $675.4 billion by 2024, growing at a CAGR of 20.4% from 2023 to 2024.
• The SaaS segment is expected to dominate the cloud computing market, with a projected market size of $1,266.4 billion by 2028 (MarketsandMarkets).

These impressive figures highlight the enormous potential for investors in the cloud computing sector.

Performance Comparison of Top Cloud Computing Stocks

7 Best Cloud Computing Stocks to Buy in 2024

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.

1. Amazon (AMZN)

Number of Hedge Fund Holders (Q2 2024): 313

Amazon, the e-commerce and cloud computing giant, needs little introduction. Through its Amazon Web Services (AWS), the company has dominated the cloud computing space, offering a wide range of services including storage, databases, analytics, and machine learning.

Amazon Web Services (AWS) continues to dominate the cloud computing landscape, with Q2 2024 sales soaring 19% year-over-year to $26.3 billion. The segment’s operating income reached $9.3 billion, a 74% increase from the previous year.

AWS’s success is driven by its broad functionality, superior security, and operational performance. The platform is attracting major clients like Commonwealth Bank of Australia and Eli Lilly, while also supporting AI startups such as Perplexity and H Company.

According to insidermonkey, Ken Fisher’s Fisher Asset Management holds 43.78 million shares of Amazon (AMZN), valued at approximately $8.46 billion

To maintain its competitive edge, AWS has introduced new features like Graviton4-based compute instances and expanded its AI capabilities. The company now offers Claude 3.5 Sonnet, Meta Llama 3.1, and Mistral Large 2 models in Amazon Bedrock, catering to the growing demand for AI-powered solutions.

According to Wall Street Analyst on AMZN stock. Of the 65 analysts following the stock, 54 give it a Buy and 3 has it at Hold.

Why We Picked Amazon (AMZN)

Amazon Web Services (AWS) is the clear market leader in the cloud computing industry, controlling over 32% of the global cloud infrastructure market. AWS’s vast portfolio of services, continuous innovation, and global infrastructure make it a top choice for businesses seeking reliable and scalable cloud solutions. Amazon’s strong financials, diversified revenue streams, and commitment to customer satisfaction further solidify its position as a top cloud computing stock.

2. Microsoft (MSFT)

Number of Hedge Fund Holders (Q2 2024): 284

Microsoft, a technology powerhouse, offers a diverse range of products and services, with its cloud computing segment, Microsoft Azure, being a key growth driver. Azure provides a comprehensive suite of cloud computing services, including AI, data analytics, storage, and networking.

Microsoft’s Q4 FY24 results showcase impressive growth in cloud computing. Azure and other cloud services saw a 29% revenue increase, driving the Intelligent Cloud segment’s 19% growth. The company’s cloud offerings continue to be a key driver of success.

Microsoft Cloud revenue reached $36.8 billion, up 21% year-over-year. This underscores the company’s strong position in the cloud market and its ability to meet customer needs across various industries.

According to insidermonkey, The Bill & Melinda Gates Foundation Trust, managed by Michael Larson, holds approximately 34.9 million shares of Microsoft (MSFT) stock, valued at about $15.6 billion.

Satya Nadella emphasized Microsoft’s focus on innovation and customer trust, particularly in AI-powered cloud solutions. The company aims to lead in the AI era while addressing mission-critical needs through its at-scale platforms.

According to Wall Street Analyst on MSFT stock. Of the 60 analysts following the stock, 49 give it a Buy and 2 has it at Hold.

Why We Picked Microsoft (MSFT)

Microsoft has successfully leveraged its expertise in software and enterprise solutions to build a robust cloud platform. With a strong focus on hybrid cloud solutions, Microsoft Azure is particularly attractive to businesses seeking flexibility and seamless integration with existing on-premise infrastructure.

3. Google (GOOGL)

Number of Hedge Fund Holders (Q2 2024): 388

Google, a subsidiary of Alphabet, is a global technology leader, offering a plethora of innovative products and services. Google Cloud, the company’s cloud computing arm, provides infrastructure, platform, and software services to businesses and developers.

Google Cloud achieved a milestone in Q2 2024, surpassing $10 billion in quarterly revenue and reaching $1.17 billion in operating profit. This represents substantial growth from Q2 2023, with revenue increasing by 28.8% and profit nearly tripling.

CEO Sundar Pichai emphasized the company’s AI innovations and infrastructure leadership as key factors driving cloud success. These advancements position Google well in the rapidly evolving tech landscape.

According to insidermonkey, Ken Fisher’s Fisher Asset Management holds a significant stake in Google’s parent company Alphabet (GOOGL). The firm owns approximately 48.6 million shares, valued at nearly $8.9 billion.

Cloud computing has become a crucial component of Alphabet’s business strategy. As part of the company’s overall 14% year-over-year revenue growth to $84.74 billion, Google Cloud’s performance underscores its increasing significance within Alphabet’s diverse portfolio.

According to Wall Street Analyst on GOOGL stock. Of the 65 analysts following the stock, 42 give it a Buy and 14 has it at Hold.

Why We Picked Google (GOOGL)

Google Cloud benefits from the company’s extensive experience in large-scale data processing and innovative culture. With a strong focus on AI and machine learning, Google Cloud offers unique capabilities that attract businesses seeking to leverage cutting-edge technologies for their operations.

4. International Business Machines Corporation (IBM)

Number of Hedge Fund Holders (Q2 2024): 54

IBM is a well-established technology company with a rich history of innovation. The company offers a diverse range of technology products and services, with a strong focus on cloud computing, AI, and enterprise solutions.

IBM’s Q2 2024 results show strong performance in cloud computing, particularly in the Software segment. Revenue grew 7.1% year-over-year, with Red Hat up 7% and Automation up 15%. This growth reflects increasing client demand for enterprise AI solutions.

The company’s focus on cloud and AI technologies is paying off, with their book of business for generative AI reaching over $2 billion since the launch of watsonx. This demonstrates IBM’s leadership in providing innovative cloud-based AI solutions.

According to insidermonkey, Ken Griffin’s Citadel Investment Group holds 2.2 million shares of IBM (International Business Machines Corporation), valued at $383.1 million.

IBM’s cloud strategy is contributing to improved financial metrics, including a 190 basis point increase in operating gross profit margin. The company raised its full-year free cash flow expectation to over $12 billion, indicating confidence in its cloud-driven growth trajectory.

According to Wall Street Analyst on IBM stock. Of the 21 analysts following the stock, 8 give it a Buy, 7 has it at Hold and 3 calls it a Sell.

Why We Picked IBM (IBM)

IBM has successfully reinvented itself as a cloud-first company, leveraging its extensive enterprise experience and strong R&D capabilities. With a focus on hybrid cloud and AI, IBM is well-positioned to cater to the complex needs of large enterprises undergoing digital transformation.

5. Oracle (ORCL)

Number of Hedge Fund Holders (Q2 2024): 95

Oracle is a veteran in the enterprise software space, offering a comprehensive suite of cloud-based applications and infrastructure services. The company’s autonomous database and cloud application platforms have gained significant traction in recent years.

Oracle’s Q1 fiscal 2025 results highlight strong growth in cloud services. Total cloud revenue reached $5.6 billion, up 21% year-over-year. Cloud infrastructure revenue saw a significant 45% increase, while cloud application revenue grew by 10%.

The company’s MultiCloud strategy is gaining traction, with agreements in place with Microsoft, Google, and now AWS. This expansion allows Oracle to offer its database technology across major cloud platforms.

According to insidermonkey, Ken Fisher’s Fisher Asset Management holds 17,587,320 shares of Oracle (ORCL), valued at approximately $2.5 billion.

Oracle continues to invest in cloud infrastructure, with 162 data centers globally. The largest facility, at 800 megawatts, will house NVIDIA GPU clusters for AI model training, reflecting Oracle’s commitment to cutting-edge cloud technologies.

According to Wall Street Analyst on ORCL stock. Of the 33 analysts following the stock, 16 give it a Buy and 13 has it at Hold.

Why We Picked Oracle (ORCL)

Oracle has successfully transitioned its business to the cloud, leveraging its strong enterprise software background. With a focus on delivering secure and reliable cloud infrastructure, Oracle has attracted businesses seeking robust and scalable solutions for their mission-critical operations.

6. Salesforce (CRM)

Number of Hedge Fund Holders (Q2 2024): 120

Salesforce is a global leader in customer relationship management (CRM) solutions, offering a wide range of cloud-based software that enables businesses to manage their customer relationships and streamline operations.

Salesforce reported robust Q1 fiscal 2025 results, with revenue reaching $9.13 billion, up 11% year-over-year. The cloud computing giant’s subscription and support revenue grew to $8.59 billion, reflecting the increasing demand for cloud-based solutions.

The company’s profitability improved significantly, with a GAAP operating margin of 18.7% and a non-GAAP operating margin of 32.1%. This demonstrates Salesforce’s ability to scale efficiently in the competitive cloud market.

According to insidermonkey, Ken Fisher’s Fisher Asset Management holds 11,962,021 shares of Salesforce (CRM), valued at approximately $3.1 billion.

Salesforce’s strong performance in cloud services is evident in its current remaining performance obligation of $26.4 billion, up 10% year-over-year. The company’s focus on AI integration and innovation continues to drive growth in the cloud computing sector.

According to Wall Street Analyst on CRM stock. Of the 52 analysts following the stock, 33 give it a Buy and 12 has it at Hold.

Why We Picked Salesforce (CRM)

Salesforce has successfully disrupted the software industry with its innovative cloud-based CRM solutions. The company’s focus on delivering industry-specific solutions and its acquisition strategy have positioned it as a go-to provider of cloud-based enterprise software.

7. Adobe (ADBE)

Number of Hedge Fund Holders (Q2 2024): 107

Adobe is best known for its creative software solutions, but the company has also made significant strides in the cloud computing market. Adobe Creative Cloud offers a suite of cloud-based applications for creative professionals, including graphic design, video editing, and web development tools. Additionally, Adobe Experience Cloud provides a range of cloud-based solutions for marketing, analytics, and customer experience management.

Adobe reported strong Q2 fiscal 2024 results, with record revenue of $5.31 billion, driven by growth across its cloud offerings. The company’s Creative Cloud, Document Cloud, and Experience Cloud segments all saw significant expansion.

Adobe’s cloud-based subscription model continues to fuel its success, with Digital Media ARR reaching $16.25 billion. The company’s focus on AI innovation and product delivery is attracting new customers and providing more value to existing users.

According to insidermonkey, Ken Fisher’s Fisher Asset Management holds 4,766,441 shares of Adobe (ADBE), valued at approximately $2.65 billion.

Looking ahead, Adobe raised its annual targets for Digital Media net new ARR, Digital Experience subscription revenue, and earnings per share. The company’s cloud strategy positions it well for continued growth in the second half of 2024 and beyond.

According to Wall Street Analyst on ADBE stock. Of the 44 analysts following the stock, 26 give it a Buy, 8 has it at Hold and 2 calls it a Sell.

Why We Picked Adobe (ADBE)

Adobe’s transition from traditional software to cloud-based solutions has been a major success story. Adobe Creative Cloud and Adobe Experience Cloud offer industry-leading solutions for creative professionals, marketers, and businesses seeking innovative cloud-based tools. Adobe’s strong brand recognition, recurring revenue model, and focus on innovation make it a compelling investment opportunity in the cloud computing space, particularly for businesses seeking cloud-based creative and marketing solutions.

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Conclusion

Investing in cloud computing stocks offers significant growth potential as businesses continue to migrate to the cloud. The 7 best cloud computing stocks to buy in 2024—Amazon, Microsoft, Google, IBM, Oracle, Salesforce, and Adobe—are well-positioned to benefit from the ongoing digital transformation. These companies have demonstrated strong market performance, innovative solutions, and strategic advantages that make them attractive investments for the future.

By diversifying your portfolio with these top cloud computing stocks, you can capitalize on the growth opportunities in the cloud computing sector and achieve robust long-term gains.

FAQs

1. What is the difference between IaaS, PaaS, and SaaS?

• Infrastructure as a Service (IaaS) provides virtualized computing resources, such as servers, storage, and networking, over the internet.
• Platform as a Service (PaaS) offers a cloud-based environment for developing, testing, and deploying applications.
• Software as a Service (SaaS) delivers software applications over the internet, eliminating the need for local installation and maintenance.

2. What are the key advantages of investing in cloud computing stocks?

Cloud computing is a high-growth industry, with a rapidly expanding addressable market. Investing in cloud computing stocks offers exposure to this dynamic sector, providing the potential for attractive returns. Cloud computing companies benefit from strong moats, with switching costs and data lock-in creating sticky business models. The recurring revenue nature of cloud services also provides a level of predictability and stability to investors.

3. How is the cloud computing market expected to grow in the coming years?

The cloud computing market is projected to continue its strong growth trajectory. According to a report by Grand View Research, the global cloud computing market size is expected to reach $909.7 billion by 2027, representing a compound annual growth rate (CAGR) of 15.7% from 2022 to 2027. This growth is driven by the increasing adoption of cloud services by businesses of all sizes, the need for remote work solutions, and the growing demand for data storage and analytics capabilities.

4. What are the key risks associated with investing in cloud computing stocks?

While cloud computing stocks present attractive investment opportunities, there are certain risks to consider. Competition in the cloud market is intense, with new entrants and established players vying for market share. This competition could lead to pricing pressures and impact profit margins. Additionally, as the cloud computing industry is subject to rapid technological changes, there is a risk that companies may fail to innovate and adapt quickly enough, leading to obsolescence. Regulatory and data privacy concerns also pose risks, particularly with the handling of sensitive data across different geographies.

5. What are the key metrics to evaluate cloud computing stocks?

When evaluating cloud computing stocks, there are several key metrics to consider. Revenue growth is an important indicator of the company’s ability to expand its business and attract new customers. Pay close attention to the annualized revenue run rate, which smooths out quarterly fluctuations. Customer acquisition and retention rates are also critical.