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4 Stocks to Track Amid Growing Demand for PaaS

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Platform as a service (“PaaS”) is rapidly becoming the go-to option for businesses owing to the many advantages it offers over traditional methods of development of software applications. Notably, one of the primary benefits that PaaS offers is reduced time of development. This is because, with the help of PaaS, programmers have access to certain pre-built tools and other resources which allows them to build the application faster, thereby, reducing the time of deployment. Moreover, even after the development and deployment of an application, programmers have the convenience of updating and maintaining the application with the help of PaaS.

Another significant advantage that PaaS offers is scalability. PaaS is available on cloud servers, giving businesses the freedom of paying for only what they need, thereby conveniently upgrading or downgrading resources based on their requirements. This means that businesses don’t have to incur additional hardware or infrastructure costs if they are scaling up their operations since it will be done by the service provider on the cloud by allocating more resources based on the packages opted for. Meanwhile, with the help of PaaS, programmers can also develop their applications for various platforms, including mobile.

Moreover, PaaS allows developers to work from anywhere, simply with the help of an Internet connection, since the services are available on cloud platforms. Interestingly, the outbreak of the COVID-19 pandemic has helped in bolstering the adoption of cloud and related services as businesses had to shift to a remote-working model to ensure continued operations.

Reflective of the positive developments that PaaS is offering to various businesses and developers, it is no surprise that the PaaS market is expected to grow going forward. Notably, Research and Markets stated in a report that the global PaaS market is estimated to witness a CAGR of 14.4% in 2021 and reach $54.09 billion, from $47.29 billion in 2020, as mentioned in a GlobeNewswire article. Moreover, the article said that the PaaS market is expected to reach $88.11 billion in 2025 at a CAGR of 13%. Meanwhile, a survey conducted by 451 Research also found that 36% of enterprises predict that in 2021, spending will increase on Infrastructure as a service, PaaS, and public cloud, as cited in an Enterprise Irregulars article.

4 Stocks to Watch Out For

The benefits that PaaS offers clearly outweigh those offered by traditional methods of application development, which is why businesses are rapidly shifting to this model to achieve more efficiency and reduce costs. Hence, this seems like a good time to watch out for companies that can take advantage of this growing adoption of PaaS. Notably, we have selected four such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alphabet Inc.’s (GOOGL - Free Report) Google offers App Engine, which is Google Cloud's PaaS and with the help of App Engine, Google handles most of the management of the resources for businesses or individuals. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 26.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 52.6%.

Microsoft Corporation (MSFT - Free Report) offers PaaS, IaaS, and so on, through its Azure cloud service. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 5.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 35.4%.

Amazon.com, Inc. (AMZN - Free Report) provides PaaS through its Amazon Web Services, namely, AWS Elastic Beanstalk which is used for deploying and scaling web applications and services. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 15.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 37.3%.

Oracle Corporation (ORCL - Free Report) provides Oracle PaaS which includes Oracle Database Cloud Service, Oracle Java Cloud Service, Oracle Mobile Cloud Service, and so on. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its next-year earnings increased 1.9% over the past 60 days. The company’s expected earnings growth rate for next year is 13.1%.

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