Investing in Cloud Computing: Top 7 Stocks to Buy
With tech stocks on the rise, cloud computing stocks have shown significant growth. A Cloud computing stock in the right company is an asset today and in the future.
Cloud computing has become remarkably popular among businesses. Small and large-scale enterprises have begun shifting to cloud computing for data storage, customer service, and computing power. Cloud stocks profited from the lockdown as this shift occurred.
Research by Gartner on cloud computing users has given readings that project a 23.1% growth in the cloud-based services industry and an even increasing 19.6% in 2022.
Here's a list of the seven best cloud computing stocks you can invest in.
Amazon: (NASDAQ: AMZN)
Amazon has built a name globally as a retail giant: the biggest name in e-commerce. A part of this conglomerate that is not so popular is the AWS, Amazon Web Services, a pioneering cloud computing service. It has had an accelerated growth for over a decade. AWS has taken a habit of investing in expanding its availability regions, making it an excellent choice for users in many countries. Although the stocks (NASDAQ: AMZN) has plummeted since there was a noticeable increase in the reopening of traditional shopping sites, the NASDAQ: AMZN has been predicted to grow following the accelerated growth from the AWS in both the first quarter (32%) and the second quarter (37%). Bringing the overall growth in the last 12 months to 29.4%.
Okta ( NASDAQ: OKTA)
Okta has become increasingly popular as there has been a higher demand for online security. The Identity management software the company provides has been in constant demand since its inception. With the work from (WFH) and remote hiring trend becoming even more popular, companies have increased demand for the protection of login details and websites for their employees; a service Okta is famous for.
NASDAQ: OKTA, Okta's stock identity, has gone up 90% in the last 12 months. The company’s dollar-based net retention rate for the last 12 months stood at 121% over the first quarter of 2021 and has remained at levels of above 117% over the last 12 quarters.
Buying at a high price is not a trend for a good investment, but with Okta stocks, an insight into the company's growth shows that these stocks are still a great buy.
With the company revenue increasing from $256million to $835 million in 3years, over three times in value from increasing subscriptions and more significant numbers of high-value customers, its per-share price has increased by $3.40 from $3.10 to $6.50. This price increase has been largely driven by the increasing subscriptions, which are predicted to increase as more businesses move online.
Comparing its stock price to its revenue, there has been an increase from around 21x to about 51x in the same time. And although it has declined to about 33x, based on trailing revenues. The price to stock ratio was driven by higher valuations for equities, in general, and also due to a preference for software as service stocks during the last year.
Okta's products are becoming an integral part of thousands of enterprises, which is bound to increase even more, and based on projected earnings, these stock's price is considered cheap.
Azure: Microsoft (MSFT)
Over the past eight years, Microsoft corp. has diversified into cloud computing and cloud-based services. With its cloud service provider at the forefront. Other services include Microsoft365, Dynamic 365, LinkedIn, Skype, gaming services, among others.
Microsoft Azure focuses on providing analytics, virtual computing, storage, networking, and other services.
An article from insider monkey listed the MSFT as the number 2 on the list of best-computing stocks. It predicted another dividend raise and a price increase from $230 to $245
The company’s overall revenue in the fiscal year 2020 was $143 billion. Shares of MSFT gained 54% over the last twelve months. Morgan Stanley analysts reiterated their Overweight rating on Microsoft (MSFT), increasing their price target to $245 (from $230) and predicting another dividend raise,
It also attributed its growth to the significant scale shift to cloud computing systems
the NASDAQ: MSFT is a suitable cloud computing stock to buy and hold as long term growth from the company's cloud computing, services are predicts
NVIDIA (NASDAQ: NVDA)
Nvidia tapped into the cloud market when it released its cloud gaming service, Geforce Now. It runs a subscription-based service that provides users access to a plethora of games hosted on Nvidia servers.
The gaming and data center businesses have shown a significant increase since inception and provided a boost in the company's Tech stock.
A recent publication by Nvidia news shows it recently acquiring Arm, its British peer, for $40 million. The announcement cited a speech from Jensen Huang, founder/ CEO Nvidia where he stated the benefits of the merger, which included Nvidia's access to ARM's vast ecosystem. He further stated that the combination has tremendous benefits for both companies, their customers, and the industry. The combination will turbocharge Arm’s R&D capacity and expand its IP portfolio with NVIDIA’s world-leading GPU and AI technology for Arm's ecosystem.
An article by Jim Craner lists it as number 3 in stocks to look out for.
The price target was raised to $223 from $214, and he noted that the ecosystem and increasing software revenues would generate additional increases.
Splunk (NASDAQ: SPLK)
Splunk, with a large number of high-profile clients, launched its cloud services in 2016 with a partnership with Google. It showed more proof of growth when it made more partnerships and created more software for smaller-scale corporations like universities to manage security and monitor login access.
The company has shown so many growth prospects and predictions of an increase in value.
The stock took a 30% dip in the last year and is currently at a low price for any investors looking to get in.
Cloud annual recurring revenue (ARR) has been off the charts and was up 83% year over year in Q1 fiscal 2022 to $833 million, but these changes have throttled overall revenue expansion.
The cloud transformation caused a dip into free cash flow in the negative, and it only just started to rise again, showing prospects in the early quarter of 2022.
It's safe to say that the NASDAQ: SPLK is back in growth mode.
Twilio (NYSE: TWLO)
Twilio is Cloud-based communication as a service platform. Twilio allows software developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs.
The last five years have seen the NYSE: TWLO grow enough to get listed in the top stock options. From an opening, the price is $16 to its current price, trading at $360.
Twilio has shown a robust growth rate. It showed robust growth rates due to its successful acquisitions. As more app developers integrate more communication tools, Twilio is set to grow even more.
As much fast-paced stock growth often shows, Twilio widening losses on a generally accepted accounting principles (GAAP) basis, much of which is attributed to its dependence on stock-based compensation and secondary offerings.
Palo Alto Networks. (NYSE: PANW)
The Palo Alto Networks stock (NYSE: PANW) rose 19% to an all-time high on Aug. 24 after the cybersecurity company broadcasted its fourth-quarter revenue. Its revenue rose 28% year over year to $1.22 billion, beating estimates by $50 million. Its adjusted net income improved 12% to $161.9 million, or $1.60 per share, surpassing expectations by $0.16.
Palo Alto anticipates its revenue to rise 26% to 28% year over year in the first quarter of fiscal 2022 and increase 24% to 25% for the whole year. These estimates surpass Wall Street's estimates. Its forecast for a 2% to 4% non-GAAP (adjusted) earnings-per-share decline in the first quarter of 2021 came in below expectations. However, its forecast for 16% to 18% earnings growth for the whole year still exceeded analysts' estimates.
Palo Alto showed accelerated growth, which can partly be attributed to the increase in large-scale cyber-attacks.
The company invested in next-gen security (NGS). A large number of the Fortune 100 companies are already using Palo Alto's cloud security.
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