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Cloud Services Demand Soars on Coronavirus Fears: 4 Winners

Ritujay Ghosh

Microsoft Corp. MSFT on May 8 said that it will create its first datacenter in Italy under a $1.5 billion investment. With this, the company continues to expand its cloud services business across the world. The news comes a couple of days after the tech giant said that it would pump in $1 billion in Poland to create a datacenter and expand its cloud services there.

Could business has been gaining popularity lately and the COVID-19 pandemic is making its importance felt further with countries under lockdown and more people working and learning from home. This has seen the world becoming cloud-dependent and companies shifting data and information to technological and digital platforms to safely remain afloat.

Microsoft Emphasizing Cloud Service

Microsoft, which is one of the market leaders in cloud service, said that it will expand its cloud computing service in Italy with a new datacenter. The Italian cloud market is poised to grow at a double-digit pace over the next few years.

Italy has embraced smartworking following the coronavirus outbreak. Analysts believe that the country will increasingly rely on digital processes for their business. Also, last week, Microsoft announced a $1 billion investment in cloud computing service in Poland over the next few years. In February, Microsoft announced plans of opening a datacenter region in Spain. Microsoft already has 60 cloud regions around the world.

Cloud Business Booming

Not only Microsoft, could services have become the focus for a large number of tech companies thanks to the ongoing pandemic.

Amazon.com, Inc. AMZN also opened a datacenter region in Italy last week. A number of companies are expecting their cloud usage to exceed plans due to the impacts of the COVID-19 pandemic. According to the ninth-annual Flexera 2020 State of the Cloud Report, 59% of the companies expect their cloud usage to be slightly or significantly higher than planned.

Last month, Zoom Video Communications, Inc.’s ZM Zoom teamed up with Oracle Corporation ORCL to expand its cloud business.Oracle has also been ramping up free online learning and certification courses amid this lockdown. Also, Alibaba Group Holdings Ltd BABA recently announced that it will invest approximately $28 billion over the next three years on its cloud infrastructure, focusing on technologies including operating system, servers, chips and network.

Our Choices

Tech companies have been aggressively expanding their cloud services, given that the coronavirus pandemic is far from over and many governments are still hesitant to lift lockdown or ease stay-at-home orders. Given the situation, we have shortlisted four tech companies that are sure to benefit from soaring demand for cloud services.

Intellinetics, Inc. INLX is a content services software company. Its flagship platform consists of IntelliCloud. The company serves health and human services, and education and law enforcement spaces. Intellinetics sports a Zacks Rank #1 (Strong Buy). The company’s shares have gained 16.3% in the past 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

ChannelAdvisor Corporation ECOM offers cloud-based e-commerce solutions and services for marketplaces, comparison shopping, paid search, social campaigns, flex feeds, web stores and rich media. 

The company’s expected earnings growth rate for the current year is 22.5%. The company’s shares have increased 49.9% in the past 30 days.  ChannelAdvisorcarries a Zacks Rank #2 (Buy).

VeriSign Inc VRSN provides Internet infrastructure services that include domain name registry services and infrastructure assurance services.

The company’s expected earnings growth rate for the current year is 24.7%. The Zacks Consensus Estimate for current-year earnings has improved 20.1% over the past 30 days.  Verisign USA carries a Zacks Rank #2.

ServiceSource International Inc SREV provides a suite of cloud applications for service revenue management. These are end-to-end management and optimization of service contract renewals process, including data management, quoting, selling and service revenue business intelligence. 

The company’s expected earnings growth rate for the current year is 50%. Its shares have gained 46.6% in the past 30 days.  ServiceSourceholds a Zacks Rank #2.

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