3 Cloud Stocks That Investors Are Paying Attention To
Without a doubt, cloud computing is a growing tech trend. That’s because many companies are hooked into the advantages of using the cloud over other options. But what is the cloud, and what companies are involved?
In this article, I’ll explain the cloud and discuss 3 companies that are growing in this space. Read on to dive in!
What is the Cloud?
Before cloud computing, technology companies had to own and run their very own servers. This means a lot of maintenance involved, but more than that, it can be suboptimal when handling users of websites, for instance. Unless peak usage is involved, servers will go underutilized.
It’s like running a gift shop without understand the peak times of when customers come in and out. If you wanted to be efficient with your funds as a store owner, you’d actually adapt with these trends. You’d employ more employees for peak times and fewer for non-peak times.
As a technology company, what if you could have servers that adapt to these types of trends and also not have to deal with the maintenance and housing of servers that you buy yourself?
That’s where the cloud comes in. The cloud refers to the idea that you outsource some other company to handle your server stuff for you. Additionally, that company can control how many servers are used depending on your needs throughout the day. That is, it can shrink and expand as you wish.
Companies in the Space
There are several companies (that are public and you can invest in) involves in the cloud space. Here are a few to analyze.
For one, Amazon is a key player in this space. As an American multinational technology company based in Seattle, Washington. Amazon focuses a lot on cloud computing, with focus on e-commerce, digital streaming, and artificial intelligence as well. In fact, it’s considered one of the big technology companies of our time.
Amazon Web Services (AWS) has been a major profit machine for Amazon for year now, and together with advertising, generates billions of dollars per year, in the ballpark of $4–5 billion dollars.
The way it works is that companies basically pay rent to Amazon based on usage of Amazon’s servers. Many companies rely on Amazon Web Services in terms of hosting their technology.
AMZN stock performance as of September 2020 from EEON
Salesforce is an American cloud-based software company headquartered in San Francisco, California. It provides customer relationship management service and also sells a complementary suite of enterprise applications focused on customer service, marketing automation, analytics, and application development.
The company has been able to create great growth through margin expansion and synergies from acquisitions. As one of the most on-demand customer relationship management services, it is cloud-based. In terms of the CRM cloud realm, that is going to grow annually.
Alphabet is a holding company founded in 2015 that operates different companies. It operates through the Google and Other Bets segments. The Google segment includes its main Internet products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube.
Not as popular as AWS but still very popular, Alphabet’s Google Cloud is in the top three in terms of cloud market share. The growth has been substantial for Alphabet in terms of revenue. Google has indicated expansion of its cloud into different areas including the travel business.
Many enterprises have moved to using the cloud and spend millions per year on it, and if they haven’t already, they’re in the process of migrating to the cloud.
Due to COVID-19, the level of use online have increased expectations, and therefore many companies are seeing more cloud usage than projected. Due to the benefits of the cloud, this is an industry that will only grow in the near future.
[Note: This article is not financial advice.]