In this piece, we will take a look at the ten cloud computing stocks under $5. For more stocks, head on over to 5 Best Cloud Computing Stocks Under $5.
Cloud computing is one of the most transformative technologies of the modern age. The Internet and its widespread use have transformed business operations and our daily lives, enabling us to achieve much more from the comfort of our homes. Whether it's work or play, the computer is essential to daily human living and the same is true for businesses as well.
Simply put, a cloud is a network of global servers that are linked together to function as a single entity and allow users to conduct a variety of tasks such as watching videos, using email, or utilizing different software. This definition does not come from us. Instead, it comes from Microsoft Corporation (NASDAQ:MSFT) one of the world's biggest technology companies, whose Azure cloud computing platform is a market leader and utilized by companies far and wide. Microsoft adds that there are primarily three different kinds of clouds, namely the public, private, and hybrid clouds. A public cloud is where the general public can access the products (such as YouTube), a private cloud is one that is typically located on a firm's premises, and a hybrid cloud is where services are shared between the public and private clouds.
The utility of cloud computing has led to its widespread adoption across a multitude of industries. These range from logistics and supply chain management, financial services, autonomous driving, telecommunications, retail, banking, and healthcare. One of the biggest examples of an application of cloud computing to everyday living is Tesla, Inc. (NASDAQ:TSLA). Tesla's latest market capitalization sits at a whopping $578 billion - more than five times the combined market value of Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM). Shocking don't you think? After all, all three make and sell cars. While it's true that Tesla's market value is also a gauge of investor optimism in the firm's future (a price to earnings ratio of 50.95 shows that investors expect growth, growth, and more growth) in manufacturing electric vehicles, an underappreciated aspect of the company's true value is autonomous driving.
Tesla, Inc. (NASDAQ:TSLA) uses cloud computing to improve its autonomous driving, as a vehicle constantly uploads data to the company's cloud to enable them to finetune the algorithms for making cars drive themselves. Since Tesla is the world's largest electric vehicle company, this provides it with a treasure trove of data and information. To gain a scope of just how far ahead Tesla, Inc. (NASDAQ:TSLA) is with the data that it has collected, consider the fact that as of April 2020, its autonomous data driving log was a stunning 3 billion miles, with Teslas in total having driven 22.5 billion miles. For comparison, back then, GM's Cruise had driven two million miles and Waymo 20 million miles. This lead in self driving has led Tesla's chief Mr. Elon Musk to speculate that his firm might really be worth a trillion dollars, should it start charging its customers for using their car as a self driving robotaxi, providing Tesla with the ability to add a software premium over its cars to charge subscription fee with little development costs.
Not to mention, the global robotaxi market is perhaps the fastest growing industry that you are likely to come across, with a research report from Fortune Business Insights estimating that the market will grow at a compounded annual growth rate (CAGR) of a whopping 80.8% between 2022 to 2029, from an initial value of $1.7 billion to a final value of $108 billion.
Yet, even as cloud computing shoots Tesla to the Moon (there's a Tesla around Mars too, if you're interested), it's also revolutionizing the company's biggest rival - oil and gas. Cloud computing can enable energy companies to become more environmentally friendly by solving problems such as habitat and land destruction, water pollution, and air pollution. It achieves these goals by digitizing assets, automating operations, accessing real time data for better insights, and improving oil recovery. No wonder then that the cloud computing market was estimated to be worth $480 billion in 2022 and should grow at a CAGR of 19.9% between then and 2029 and be worth an eye popping $1.7 trillion according to research from Fortune Business Insights.
On the ground, spending in the industry is slowing down as firms battle inflation. This was at the center of the discussion for cloud computing during Amazon.com, Inc. (NASDAQ:AMZN)'s fourth quarter of 2022 earnings call. Amazon, which operates the Amazon Web Services (AWS) divisions, is one of the biggest players in the industry, and at the event its chief financial officer Mr. Brian Olsavsky shared:
Moving on to AWS. Net sales increased $21.4 billion in Q4, up 20% year-over-year and now representing an annualized sales run rate of more than $85 billion. Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions.
As expected, these optimization efforts continued into the fourth quarter. Some of the key benefits of being in the cloud compared to managing your own data center are the ability to handle large demand swings and to optimize costs relatively quickly, especially during times of economic uncertainty. Our customers are looking for ways to save money, and we spend a lot of our time trying to help them do so. This customer focus is in our DNA and informs how we think about our customer relationships and how we will partner with them for the long term. As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters. So far in the first month of the year, AWS year-over-year revenue growth is in the mid-teens.
That said, stepping back, our new customer pipeline remains healthy and robust, and there are many customers continuing to put plans in place to migrate to the cloud and commit to AWS over the long term.
With these details, let's take a look at some affordable cloud computing stocks, with the top picks being Edgio, Inc. (NASDAQ:EGIO), VNET Group, Inc. (NASDAQ:VNET), and Lumen Technologies, Inc. (NYSE:LUMN).
Photo by Taylor Vick on Unsplash
To compile our list, we first listed all companies that offer cloud computing services as a central part of their business model. Then, only those with a share price below $5 were selected. The firms are ranked through hedge fund sentiment courtesy of Insider Monkey's fourth quarter of 2022 survey of 943 hedge funds.
Cloud Computing Stocks Under $5
10. Sphere 3D Corp. (NASDAQ:ANY)
Number of Hedge Fund Investors in Q4 2022: 1
Sphere 3D Corp. (NASDAQ:ANY) is a bitcoin mining and cloud computing platform provider that enables customers to use its data infrastructure for data center data storage and recovery. Other cloud computing services in its portfolio include server and desktop virtualization. The firm is headquartered in Toronto, Canada.
By the end of last year's fourth quarter, one of the 943 hedge funds part of Insider Monkey's database had bought Sphere 3D Corp. (NASDAQ:ANY)'s shares.
Along with VNET Group, Inc. (NASDAQ:VNET), Edgio, Inc. (NASDAQ:EGIO), and Lumen Technologies, Inc. (NYSE:LUMN), Sphere 3D Corp. (NASDAQ:ANY) is a cheap cloud computing stock that trades under $5.
9. GigaMedia Limited (NASDAQ:GIGM)
Number of Hedge Fund Investors in Q4 2022: 1
GigaMedia Limited (NASDAQ:GIGM) is a Taiwanese firm that is headquartered in Taipei, Taiwan. It has different kinds of services through a public cloud platform in its portfolio. GigaMedia Limited (NASDAQ:GIGM)'s video game portal enables people to play video games such as cards, sports games, multiplayer, and roleplaying games from their mobiles or computers.
Insider Monkey took a look at 943 hedge fund investments for last year's fourth quarter and found out that one had invested in GigaMedia Limited (NASDAQ:GIGM). This lone investor is John Overdeck and David Siegel's Two Sigma Advisors which owns 13,200 shares that are worth $15,972.
8. Duos Technologies Group, Inc. (NASDAQ:DUOT)
Number of Hedge Fund Investors in Q4 2022: 2
Duos Technologies Group, Inc. (NASDAQ:DUOT) is an American software company that is headquartered in Jacksonville, Florida. It is one of the few firms in its industry which offers artificial intelligence as a service (AIaaS) which is available for use on a cloud platform or on the edge. The AIaaS platform makes it an interesting cloud computing stock under $5.
As part of their Q4 2022 investments, two of the 943 hedge funds part of Insider Monkey's database had held a stake in the company. Duos Technologies Group, Inc. (NASDAQ:DUOT)'s largest investor in our database is Sander Gerber's Hudson Bay Capital Management which owns 21,696 shares that are worth $45,562.
7. One Stop Systems, Inc. (NASDAQ:OSS)
Number of Hedge Fund Investors in Q4 2022: 2
One Stop Systems, Inc. (NASDAQ:OSS) is a hardware company whose products are used in cloud computing infrastructure. Its SkyScale service offers Cloud GPU performance.
Two of the 943 hedge funds surveyed by Insider Monkey had bought One Stop Systems, Inc. (NASDAQ:OSS)'s shares as of December 2022. The firm's largest investor is Cynthia Paul's Lynrock Lake which owns a $5.36 million stake.
6. Xunlei Limited (NASDAQ:XNET)
Number of Hedge Fund Investors in Q4 2022: 4
Xunlei Limited (NASDAQ:XNET) is a Chinese company headquartered in Shenzhen. It operates a cloud platform for content storage and consumption.
As of Q4 2022, four of the 943 hedge funds part of Insider Monkey's database had invested in the firm. Xunlei Limited (NASDAQ:XNET)'s largest investor is D.E. Shaw's D E Shaw which owns 169,644 shares that are worth $208 million.
Edgio, Inc. (NASDAQ:EGIO), Xunlei Limited (NASDAQ:XNET), VNET Group, Inc. (NASDAQ:VNET), and Lumen Technologies, Inc. (NYSE:LUMN) are some of the top cloud computing stocks under $5.
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Disclosure: None. 10 Cloud Computing Stocks Under $5 is originally published on Insider Monkey.