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2 Big Cloud Opportunities You Don't Want To Miss

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This week's Cloud earnings have been a wild ride for shareholders, but 2 rare buying opportunities have presented themselves.


Salesforce (CRM - Free Report) blew out both top and bottom-line estimates, but investors were concerned about the $27.7B acquisition of Slack (WORK). CEO Marc Benioff promised no M&A activity for the remainder of 2020, and this move came as a surprise to investors.

CRM shares have dipped over 8% since it released earnings

This acquisition would represent the largest in its history, but analysts don't like the fundamentals. Slack should have been a pandemic winner, but its growth figures have been unimpressive.

Benioff is confident that his enterprise's institutional partnerships and digital expertise will bring this Slack to its full potential.

Don't bet against Benioff is what I've learned with its slew of excellent acquisitions, including the $15.3B Tableau deal last year, which was met with initial skepticism but was ultimately a success.  

I think CRM is a buy following the earnings sell-off, and I will average down on CRM shares if it continues to fall.


Splunk (SPLK - Free Report) had a nasty earnings report, missing big on both top and bottom lines, which caused a whiplash 23% sell-off, creating what I see as a ripe buying opportunity for this innovative leader. Short-term headwinds have caused a massive profit-pull from the stock pushing its RSI straight down to oversold levels, and I am down here to pick up the shares.

Splunk's real-time data management and analytics leadership span across many growing business applications with massive addressable markets. The company's primary revenue drivers now are security information and event management (SEIM), as well as IT operation management.

With companies operating remotely, security threats are heightened, and Splunk's best-in-class SEIM platform will become even more of a necessity. Splunk's ability to automate IT workflows is also increasingly attractive for companies cutting human capital.

These two applications are just the tip of the iceberg for the eminence functionality that Splunk is capable of. The firm is pioneering real-time business analytics that will take structured and unstructured machine data from almost any source and turn it into actionable insight. The internet of things (IoT) is about to hit an inflection point with the 5G technology rollout.

5G is going to connect almost everything around us. The ability to analyze and make decisions on real-time data will give Splunk's clients a leg up on its competition. Some analysts are putting its total addressable market at close to $40 billion, more than 18x its current annual revenue. The future opportunity for SPLK is enormous, especially considering there are no close competitors in the space.

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