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3 Stocks to Benefit From Increasing Adoption of Hybrid Cloud

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Anirudha Bhagat
·5 min read
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Even before the COVID-19 crisis, enterprises were rapidly shifting their workloads to hybrid cloud. The pandemic has only accelerated this transition.

The hybrid cloud concept is based on creating an ecosystem of co-existence of public and private clouds, thereby enabling companies to maximize the benefits of both public and private cloud environments. In hybrid cloud computing, IT resources are deployed and managed through a combination of on-premise and third-party cloud computing services.

The key features of hybrid cloud include protection, security and compliance, integration and orchestration, and data location optimization. Owing to the aforementioned features, organizations are preferring hybrid cloud over public cloud and private cloud concepts.

Speaking of security, hybrid cloud allows organization to choose dedicated servers or network devices that can facilitate isolation of data and ensure better control over critical operations. Although the hybrid cloud isn’t faster than a multi-cloud or a public cloud environment, it does, however, enable network optimization to minimize latency.

Scalability is another advantage as hybrid computing makes use of the public cloud platform. Remarkably, public cloud resources facilitate the development of new applications, with the ability to run powerful analytics programs that are beyond the capacity of small organizations.

Hybrid Cloud Adoption to Shoot Up

Hybrid computing adoption is likely to shoot up in the years to come as interoperability between cloud systems and private networks are taking center stage. Apart from this, the widespread adoption of artificial intelligence, machine learning, Internet of Things and need of high capacity storage is fueling the demand for hybrid cloud.

According to a report from Mordor Intelligence, the hybrid cloud market is projected to witness a CAGR of 18.73% between 2020 and 2025, and hit $128.01 billion.

Increasing migration of workloads to cloud will propel demand for solutions ranging from human capital management to cloud infrastructure monitoring as well as web-based application performance management. This underscores the massive growth opportunity for cloud service providers.

Let’s, thus, take a closer look at some of the notable hybrid cloud stocks that that are well poised to benefit from this increasing adoption of hybrid cloud.

3 Hybrid Cloud Stocks to Focus On

Amazon AMZN has been a crucial hybrid cloud solutions provider in some way or the other, since the inception of Amazon Web Services (AWS). Although known for its public cloud solutions, AWS offers several solutions to connect on-premises installations to cloud as well.

AWS offers Outposts solution, which is a fully-managed service that keeps AWS-built server racks integrated with AWS software inside customer data centers generally available. With its wide array of services, along with the global data-center presence and billions of available cash for investments, AWS is well poised to grab the increasing opportunity in the hybrid cloud space.

Shares of this Zacks Rank #3 (Hold) company surged 76.3% in 2020. The stock has a long-term expected earnings growth rate of 29.2%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazon.com, Inc. Price

Amazon.com, Inc. Price
Amazon.com, Inc. Price

Amazon.com, Inc. price | Amazon.com, Inc. Quote

Microsoft MSFT is a dominant hybrid cloud solutions provider. The company is a pioneer in delivering a consistent private cloud experience using Azure Stack, enabling enterprises to build innovative hybrid cloud solutions.

Azure’s increased availability in more than 60 announced regions globally is likely to have strengthened Microsoft’s competitive position in the cloud computing market. Notably, Azure’s revenues surged 47% at constant currency on a year-over-year basis in first-quarter fiscal 2021 on robust growth in its consumption-based business.

Microsoft currently carries a Zacks Rank #3 and has a long-term earnings growth rate of 13.2%. Shares of the company gained 41% in 2020.

Microsoft Corporation Price

Microsoft Corporation Price
Microsoft Corporation Price

Microsoft Corporation price | Microsoft Corporation Quote

VMware VMW has positioned itself robustly to benefit from the increasing adoption of cloud-based solutions. Enabling software support on cloud is a positive as many enterprises now prefer public cloud platforms like AWS, Microsoft’s Azure and Google Cloud.

VMware has partnered with AWS to offer an integrated hybrid cloud solution, functioning much like a SDDC. Moreover, VMware and AWS have expanded their partnership that now enables the latter to resell VMware Cloud on the platform. VMware Cloud on AWS is now available in 17 regions all over the globe.

The company has expanded its partnership with International Business Machines IBM to include a new IBM Service offering that will help migrate and extend mission-critical VMware workloads to the IBM Cloud. It also encompasses new integrations to help enterprises modernize applications with Kubernetes and containers. In addition, partnerships with Alibaba, Google Cloud and Azure are anticipated to stoke VCPP growth over the long haul.

VMware holds a Zacks Rank of 3 presently and has a long-term earnings growth rate of 14.6%.

VMware, Inc. Price

VMware, Inc. Price
VMware, Inc. Price

VMware, Inc. price | VMware, Inc. Quote

Zacks Top 10 Stocks for 2021

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