Cloud computing has been gaining ground rapidly of late on features that reduce cost and make optimum utilization of resources. In fact, the trend is evident from recent survey reports of International Data Corporation (IDC) and Gartner.
Why Cloud Stocks are a Buy?
Cloud computing has been playing a crucial role in minimizing capital expenditure. With the help of public cloud resources, small and medium size enterprises are setting up infrastructure on-premises or in private cloud through the deployment of hybrid cloud. This hybrid cloud service reduces costs while making applications portable across cloud.
Moreover, cloud computing provides security, reliability, and optimum utilization of resources, which has persuaded small and medium-sized enterprises and large-scale organizations to adopt cloud computing.
Per IDC’s recent study, “public cloud spending is expected to grow from $229 billion in 2019 to nearly $500 billion in 2023 at a CAGR of 22.3%.” This digital transformation primarily in areas of Customer Relationship Management (CRM) and Enterprise Resource Management (ERM) are driving demand for public cloud spending.
Per a Gartner survey report, “more than a third of organizations see cloud investments as a top three investing priority, which is impacting market offerings.” Thereby, a boost in the cloud market can be easily projected. Here’s what Gartner’s report forecasts.
Source: Gartner (April 2019)
Per a Market Reports Worlds report, “the demand for cloud computing is expected to rise which will lead to the expansion of the global cloud computing market at a CAGR of over 16%” during the 2019 and 2023 forecasted period.
Meanwhile, in the third quarter, software giant like Microsoft Corporation (
MSFT Quick Quote MSFT - Free Report) has reported better-than-expected results primarily driven by Azure cloud services. Notably, the Azure cloud services generated revenues of $11.6 billion in the reported quarter. In fact, Microsoft recently won a contract worth $10 billion from Pentagon for cloud computing services edging out Amazon. The Joint Enterprise Defense Infrastructure (JEDI) is aimed at bolstering the U.S. military technology. This not only gives a boost to Microsoft’s Azure but also the entire cloud services industry to innovate in order to meet rising demand.
Companies like Alphabet, Inc. (
GOOGL Quick Quote GOOGL - Free Report) , Amazon.com Inc.’s ( AMZN Quick Quote AMZN - Free Report) AWS and other private players are also catching up eventually boosting growth in cloud computing space. However, cloud companies have been facing a host of controversies when it comes to government sectors. Nevertheless, cloud’s potential to innovate and continuously improve operations has been persuading government enterprises to embrace cloud computing. 5 Cloud Stocks to Buy Now
Given the aforesaid positives, investors can take a look at our top five cloud stock picks that hold promise. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Pivotal Software, Inc. is a publicly traded company that provides platform-as-a-service solutions to automotive, financial services, industrial, insurance, media, retail, technology and telecommunications sectors. The company’s expected earnings growth rate for the current quarter is 40% against the industry’s decline of 40.2%.
The Zacks Consensus Estimate for current-year earnings has improved 13.3% over the past 60 days. Pivotal flaunts a Zacks Rank #1. You can see
the complete list of today’s Zacks #1 Rank stocks here. Verizon Communications Inc. ( VZ Quick Quote VZ - Free Report) is a publicly traded communication services company that offers cloud services through the Verizon Cloud. It offers users secure cloud storage and provides automatic back up and synching facility. The company’s expected earnings growth rate for the current year is 2.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 90 days. Verizon carries a Zacks Rank #2. Dell Technologies Inc. ( DELL Quick Quote DELL - Free Report) is a publicly traded information technology solutions company that provides cloud services through Dell Cloud. Notably, Dell Cloud offers end-to-end portfolio of infrastructure, services and management tools. The company’s expected earnings growth rate for the next year 2020 is 1.1%
The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the past 60 days. Dell carries a Zacks Rank #2.
Microsoft is a publicly traded technology company that offers cloud computing services through Microsoft Azure. The company’s expected earnings growth rate for the current year is nearly 12.2% against the industry’s decline of 0.7%.
The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 60 days. Microsoft carries a Zacks Rank #2.
Adobe Inc. ( ADBE Quick Quote ADBE - Free Report) is a publicly traded software company that provides cloud computing through Adobe Creative Cloud. The company’s expected earnings growth rate for the current year is nearly 16% against the industry’s decline of 0.7%.
The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 60 days. Adobe carries a Zacks Rank #2.
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