The pandemic has shown how technology saved so many businesses from a total collapse. Everything from shopping to ordering food to working and learning was made possible sitting at home, thanks to technology. This digital transformation has led to the growing importance of cloud-based solution companies.
Companies Shifting Focus to Cloud Business
As more people are working and learning remotely, companies are adopting software-as-a-service (SaaS), which is benefitingcompanies that provide cloud-based solutions. And they are likely to be high on demand as companies adopting SaaS have realized that it’s also a cost-effective and flexible method of operation.
Most businesses are shifting data and information to technological and digital platforms to safely remain afloat, benefiting the cloud business. According to a recent report by Canalys, companies in the United States spent a whopping $18 billion on cloud services in the first quarter of this year, reflecting a 29% year-over-year jump.
This was also the highest growth rate in terms of spending in the past couple of years. Moreover, the United States was the largest market for cloud infrastructure service in the first three months of the year, accounting for 44% of the overall global spending. The top three cloud service providers in the first quarter were
Amazon.com, Inc.’s ( AMZN Quick Quote AMZN - Free Report) Amazon Web Services (AWS), Microsoft Corporation’s ( MSFT Quick Quote MSFT - Free Report) Microsoft Azure and Alphabet, Inc.’s ( GOOGL Quick Quote GOOGL - Free Report) Google Cloud, which collectively accounted for 69% of the total spending. Demand for IaaS and SaaS Increasing
The cloud-based service market, which includes IaaS and SaaS, has been growing in importance. Also, diagnosis software and cybersecurity applications have been giving a boost to the demand for IaaS and SaaS.
Besides, video conferencing, online classes, data storage, gaming and e-commerce have been helping the cloud market to grow. In fact the pandemic has given a double boost to the cloud services industry. While remote working, learning and shopping have been benefiting the market on the one hand, big data, which has been a big asset of the healthcare industry, has been boosting demand for cloud services on the other.
Storing and managing huge data is increasingly becoming important for the healthcare industry, which is only going to further boost demand for cloud services.
Also, enhanced focus on cybersecurity is going to aid the cloud-based service market in the future. The U.S. government has already increased spending on cybersecurity by investing in cloud services lately and in doing so has pumped in $1 billion to the Technology Modernization Fund as part of the American Rescue Plan.
Needless to say, cloud business is working miracles for many companies as large corporations accelerate their digital shift due to the coronavirus crisis. Hence, several companies are already expecting their cloud usage to exceed plans due to the impacts of the COVID-19 pandemic. Thus the new trend of remote working and learning is here to stay, which will only help drive the cloud business in the days to come.
Tech companies have been aggressively expanding their cloud services, given that the coronavirus pandemic is far from over. Given the situation, we have shortlisted four tech companies that are sure to benefit from soaring demand for cloud services.
Zoom Video Communications, Inc.’s ( ZM Quick Quote ZM - Free Report) cloud-native unified communications platform, which combines video, audio, phone, screen sharing and chat functionalities, makes remote-working and collaboration easy.
The company’s expected earnings growth rate for the current year is 39.5%. The Zacks Consensus Estimate for current-year earnings has improved 27% over the past 60 days. Zoom sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Digital Turbine, Inc. ( APPS Quick Quote APPS - Free Report) offers products and solutions for mobile operators, device OEMs and third parties. The company's products include DT Ignite, a mobile device management solution with targeted app distribution capabilities, DT IQ, a customized user experience and app discovery tool, DT Marketplace, an application and content store and DT Pay, a content management and mobile payment solution.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. Digital Turbine carries a Zacks Rank #1.
CDW Corporation ( CDW Quick Quote CDW - Free Report) offers discrete hardware and software products to integrated IT solutions businesses such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.
The company’s expected earnings growth rate for the current year is 11.8%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. CDW Corporationhas a Zacks Rank #2.
BlackLine, Inc. ( BL Quick Quote BL - Free Report) is a provider of cloud-based solutions for Finance & Accounting, which centralize and streamline financial close operations and other key F&A processes for midsize and large organizations.
The company’s expected earnings growth rate for next year is 59.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. BlackLine has a Zacks Rank #2.
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