Why These 7 Cloud Computing Stocks Should be on Your Radar in 2024
As we usher in a a burgeoning bull market in 2024, it’s paramount to turn our attention to the top cloud computing stocks. The last decade has showcased cloud computing’s role in revolutionizing business operations, enhancing collaboration, scalability, cost-effectiveness, and data security. With these benefits, the cloud computing market is gearing up for massive growth, so investors should eye companies with adaptability to rapid market changes. Looking towards 2024, the business spending on cloud infrastructure is anticipated to exceed $1 trillion for the first time. A growing demand for new platforms and as-a-service options will drive this trend.
The horizon for cloud computing shines even further, with Mordor Intelligence anticipating the market to reach a staggering $1.24 trillion by 2028, growing at a 16.40% CAGR from 2023 to 2028, highlighting its immense potential as an investment hotspot.
Now, let’s explore the top cloud computing stocks set to stand out in 2024.
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Cloud Computing Stocks: Amazon (AMZN)
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Amazon (NASDAQ:AMZN) is experiencing a landmark year, with its stock soaring over 74% year-to-date (YTD), largely propelled by its leading cloud computing arm, Amazon Web Services (AWS). AWS stands as the globe’s preeminent cloud computing entity, a position further solidified by its innovative strides in 2023.
Moreover, the recent AWS Reinvent conference showcased groundbreaking developments in generative AI and enhanced cloud security. Graviton4 and Trainium2 chips, newly unveiled, set to revolutionize generative AI and high-demand workloads, boasting faster speeds and cost savings. Consequently, AWS CEO Adam Selipsky emphasized Generative AI’s critical role in cloud infrastructure, focusing on AI training, large language model tools, and AI-centric applications.
Furthermore, AWS’s financial performance in its latest quarter mirrors its advancements, with a 13% year-over-year (YOY) revenue increase and a staggering 244% surge in net income. This robust financial health, coupled with TipRanks analysts assigning a strong buy and an 18.48% upside potential, paints a bright future for Amazon’s cloud computing juggernaut.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) is making significant strides, with Microsoft Azure at the forefront of its generative AI services’ growing prominence. The introduction of Azure Cobalt, a custom CPU tailored for cloud applications, and Azure Maia, a custom-designed AI accelerator chip, marks a leap in Microsoft’s cloud computing prowess and its AI infrastructure.
Further bolstering its position in the AI arena, Microsoft has teamed up with NVIDIA to build the world’s fastest cloud AI computer. This collaboration leverages Microsoft’s Azure infrastructure and NVIDIA’s cutting-edge technology, setting a new benchmark in AI technology.
On the financial front, Microsoft’s robust performance is evident. The company has seen a 13% revenue increase to $56.5 billion and a 26.97% jump in net income to $22.3 billion. These figures, along with a 54.74% rise in stock value YTD and a strong buy rating with a 14% upside potential from TipRanks analysts, solidify Microsoft’s status as a powerhouse in both technology and the stock market.
Cloud Computing Stocks: Alphabet (GOOG,GOOGL)
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Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has become a key player in the cloud computing market, offering diverse services ranging from AI and machine learning to data storage. After years of its cloud business operating at a loss, a pivotal change occurred at the beginning of 2023 when Alphabet reported its first operating profit in this domain, marking a significant milestone.
At the Google Cloud Next 2023 event, CEO Sundar Pichai emphasized Alphabet’s transition to an AI-first strategy. This shift has led to remarkable improvements across Alphabet’s product range, leveraging AI for enhanced performance and innovation.
Financially, Alphabet showcased its strength with global revenue growth of 11% YOY to $76.69 billion and a net profit surge of 41.55%. Notably, Google Cloud achieved a record $8.41 billion in revenue, a 22.47% increase from the previous year. Reflecting this strong performance, TipRanks analysts assign Alphabet a strong buy rating, with a projected 16.12% upside potential, signaling a bright future ahead for the company.
Altair Engineering (ALTR)
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Altair Engineering (NASDAQ:ALTR), a trailblazer in computational science and AI, is reshaping the landscape of high-performance computing (HPC) and cloud solutions. Specializing in software for simulation, data analytics, and an array of optimization technology products, Altair caters to a diverse clientele with its ITS portfolio and expert engineering services.
Moreover, ALTR’s latest Altair HPCWorks 2024 represents major advancements. This innovative offering integrates AI to enhance user experience and functionality, streamlining distributed workflows and simplifying cloud scaling. Additionally, its integration with NavOps, a sophisticated workload management solution, enables smooth migration of compute-heavy workloads to the cloud, enhancing both visibility and control over cloud resources.
Financially, ALTR’s latest quarter results reflect its upward trajectory, showing a 14.8% YOY increase in software product revenues and a 12.3% rise in total revenue. According to Simply Wall St., Altair is projected to grow earnings and revenue by 122.7% and 8.8% annually, positioning the company as a promising cloud computing stock for growth-focused investors.
Cloud Computing Stocks: ServiceNow (NOW)
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ServiceNow (NYSE:NOW), a notable player in cloud computing, serves over 7,700 global enterprise customers with software designed to streamline work processes and bolster cyberattack defenses. NOW shares have seen a remarkable 81% increase YTD and are fast approaching their all-time high from late 2021, showcasing its impressive market performance.
The launch of NOW’s latest platform, Vancouver, marks a leap in AI utilization. This advancement allows employees to access data more swiftly and simplifies programming by allowing users to create computer programs using natural language rather than traditional coding. This innovation significantly enhances efficiency in technology use.
Furthermore, NOW’s financials show robust growth, with revenues reaching $2.28 billion, a 25% increase YOY, and the company’s current remaining performance obligations standing at $7.43 billion. Impressively, NOW has 1,789 customers with over $1 million in annual contract value (ACV), a 17% increase in such customers YOY, highlighting its consistent expansion and solidifying its status as a leading cloud computing firm.
Datadog (DDOG)
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Datadog (NASDAQ:DDOG) stands out in the cloud computing sector by enabling businesses to effectively manage their cloud infrastructure. Focused on cybersecurity, the company safeguards critical data, and instead of creating its cloud platforms like AWS or Azure, it specializes in overseeing these systems, garnering trust from renowned clients like Twilio (NYSE:TWLO), Nasdaq (NASDAQ:NDAQ), and Maersk (OTCMKTS:AMKBY).
Moreover, Datadog is enhancing AI ecosystems by using Large Language Models (LLM) for efficient troubleshooting. Their new tool for tracking LLM prompts and responses optimizes performance and user experience. Additionally, Flex Logs offers a solution for managing growing log volumes with long-term retention and clear visibility.
Financially, DDOG stands out with a 70% YTD gain and a 226% increase over the past five years. The company’s recent 25.4% YOY revenue growth is impressive, and the surge in customers paying over $100,000 in annual recurring revenue, from approximately 2,600 to 3,130 in one year, underscores Datadog’s sustained growth and profitability.
Zscaler (ZS)
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Zscaler (NASDAQ:ZS) continues to shine as one of the top performers in the cloud computing market. The stock boasts an impressive 101% increase YTD and a 479% gain over the past five years, demonstrating resilience and underscoring its enduring appeal in the sector. At the core of Zscaler’s success is its robust cloud security platform, which protects critical documents and data across both public and private clouds.
Furthermore, Zscaler kicked off its latest quarter with a robust 40% YOY revenue growth and billings rose by 34%, indicating sustained and strong revenue potential. Collaborating with CrowdStrike and Imprivata, Zscaler recently introduced a zero-trust security solution for healthcare organizations, enhancing visibility and threat protection. These strategic initiatives solidify Zscaler’s role as a leading force in the cloud computing field.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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