Cloud computing became a hot new industry in the 2010s, and its growth is continuing today as companies around the world shift their digital data and services to the cloud.
Namely, these data, files, and services are being shifted to remote data centers and accessed via the internet.
The move to remote work only accelerated the shift to the cloud. To use a popular baseball analogy, the cloud is still in the early innings.
Cloud computing is closely tied to other emerging tech trends such as 5G networks, the Internet of Things (IoT), and artificial intelligence and machine learning.
By the end of the decade, global cloud spending revenue could top $1 trillion annually.
This is benefiting various forms of cloud computing stocks.
The best cloud computing stocks
Let’s take a look at the top cloud computing stocks on the market.
As you might imagine, there are bigger players and smaller players.
Let’s start with the top three:
#1 Amazon (AMZN)
Amazon is a huge player in cloud computing. Owning almost half the world’s public cloud infrastructure market, Amazon is the clear market leader.
Its main offering is called Amazon Web Services (AWS).
Amazon got a big first step on the rest of the market. AWS rolled out its first mass-market product, Simple Storage Service, or S3, on March 14, 2006. This was back when practically all computer storage was done locally.
AWS includes infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) products. Customers can use AWS for everything from data storage to machine learning.
Some of Amazon’s biggest customers include Airbnb, General Electric, Lyft, and McDonald’s.
AWS is a huge profit center for Amazon. AWS generates an operating margin beyond 30 percent.
For comparison, Amazon’s North American e-commerce business had an operating margin of just 4.5 percent.
Investors who want to profit from Amazon’s cloud business could consider owning Amazon stock.
#2 Google (GOOG)(GOOGL)
Google is one of the top players in cloud computing. It’s a subsidiary of Alphabet (GOOGL), and its main cloud offering is called Google Cloud.
Google Cloud includes a wide range of products, including IaaS, PaaS, and SaaS products.
Customers can use Google Cloud for everything from data storage to artificial intelligence (AI) services.
Some of Google’s biggest customers include Coca-Cola, HSBC, Snapchat, and Spotify.
Google Cloud is generating over $20 billion in revenue and is growing quickly.
Analysts also believe that Google Cloud could be a $500 billion business by 2030.
Investors who want to get in on the ground floor of the cloud computing industry could consider buying Alphabet stock.
Not only that, but you also get lots of other things within Google as well. It has a monopoly in search, which is the bulk of its profits (advertising). It also owns the world’s second-top search engine (YouTube).
It owns several other great projects as well, such as Waymo, the top autonomous driving autonomous driving technology development company.
#3 Microsoft (MSFT)
Microsoft is the third-biggest player in cloud computing. Its main offering is called Azure.
Azure includes IaaS, PaaS, and SaaS products. Customers can use Azure for everything from data storage to web hosting.
Some of Microsoft’s biggest customers include 3M, Boeing, Dell, and General Motors.
Azure is a growing revenue driver and profit center for Microsoft.
These are the three biggest cloud computing stocks on the market. But there are plenty of other ways to profit from the cloud computing industry.
For example, you could buy stock in a cloud-based software company or a company that provides data storage services geared toward a specific market, such as gaming or small businesses.
Let’s take a look at some of the smaller players, which at the same time, are still companies worth tens of billions of dollars.
#4 Adobe (ADBE)
Adobe is best known for its Creative Suite products, which include Photoshop, Illustrator, and InDesign.
But the company has also shifted its focus to the cloud. Adobe’s Creative Cloud includes all of its Creative Suite products plus additional cloud-based services.
Customers can use the Creative Cloud to store and share files, collaborate with others, and access Adobe’s apps on any device.
Adobe’s shift to the cloud has been a big success. The company now has more than 11 million Creative Cloud subscribers.
#5 Salesforce (CRM)
Salesforce is best known for its customer relationship management (CRM) software.
But the company has also shifted its focus to the cloud. Salesforce’s main product is called Salesforce Cloud.
It includes CRM software, marketing automation software, and e-commerce software. Customers can use Salesforce Cloud to manage their customer relationships and run their businesses in the cloud.
Salesforce’s shift to the cloud has been a big success. The company now has more than 150,000 customers.
The company is also profitable, so it’s not just another one of those fast-growing companies that loses money.
#6 Veeva Systems (VEEV)
Veeva Systems is a cloud-based software company that specializes in life sciences and provides software in customer relationship management, data management, and compliance.
The company’s products are used by pharmaceutical companies, biotech companies, and medical device companies.
Some of Veeva’s biggest customers include Johnson & Johnson, Pfizer, and Merck.
Veeva’s products are very popular in the life sciences industry. The company now has more than 700 customers and recently looked to target clients in medical centers and doctor’s offices.
#7 Workday (WDAY)
Workday is a cloud-based software company that specializes in human capital management (HCM).
The company’s products are used by businesses to manage their employees.
Some of Workday’s biggest customers include Coca-Cola, IBM, and Lowe’s.
Workday’s products are very popular in the HCM industry. The company now has more than 2,700 customers.
#8 The Trade Desk (TTD)
The Trade Desk is best known for its programmatic advertising platform for clients focused on media buying. The company’s platform is used by advertisers to buy and manage advertising campaigns.
The Trade Desk’s platform is very popular in the advertising industry. The company now has more than 2,000 customers.
#9 Digital Ocean (DOCN)
Digital Ocean is a cloud-based infrastructure company that specializes in providing developers with cloud services.
The company’s products are used by developers to create and manage websites, apps, and databases.
Digital Ocean’s products are very popular in the developer community. The company now has more than 12,000 customers.
While Digital Ocean is similar to Amazon’s AWS, Microsoft Azure, and Google Cloud, the big three are focusing their attention on large enterprises because that’s where most of the money is for them.
However, DigitalOcean is “cloud for the little guy”, aiming at the large but largely underserved small business and start-up community. For example, web entrepreneurs can host their site’s on Digital Ocean for very reasonable prices.
#10 Unity Software (U)
Unity Software is best known for its Unity game engine. The Unity game engine is used by developers to create video games.
The Unity game engine is very popular in the gaming industry. The company now has more than 4,500 customers.
With more of the gaming industry now going to the cloud, Unity Software is working to capture this trend.
Cloud computing ETFs
To add onto this list, we have the best cloud computing ETFs.
The two most popular cloud computing ETFs are:
1) First Trust Cloud Computing ETF (SKYY)
2) Global X Cloud Computing ETF (CLOU)
These ETFs give you a blend of dozens of cloud computing stocks.
Their expense ratios tend to be a bit higher at around 0.6-0.7 percent. This means for every $1,000 invested, it will cost around $6 to $7 in expenses per year.
Some view this as too high while others consider it a reasonable cost for getting a basket of the best cloud computing stocks that can take advantage of the tailwinds in this industry.
Cloud computing FAQ
As an investor or trader of cloud stocks, a good understanding of the basics of the industry is essential.
Let’s take a look at some of the most basic background info on cloud computing and cloud storage.
What is cloud storage?
Cloud storage is a cloud computing model in which data is stored on remote servers accessed via the Internet, or “cloud”.
It is a convenient way to store and share data, as well as providing users with on-demand access to a variety of cloud-based services, such as backup and disaster recovery.
What are the benefits of cloud storage?
There are many benefits of cloud storage, including the following:
- Convenience: Users can access their data from anywhere at any time, as long as they have an Internet connection.
- Cost savings: Cloud storage can be more cost-effective than traditional on-premises storage solutions.
- Scalability: Cloud storage can be easily scaled up or down to meet changing needs.
- Performance: Cloud storage can provide high levels of performance and availability.
- Security: Data stored in the cloud is typically more secure than data stored on-premises.
What are some common cloud storage applications?
Cloud storage can be used for a variety of applications, including the following:
- Backup and disaster recovery: Cloud storage can be used to store backups of data in case of data loss or corruption.
- File sharing: Cloud storage can be used to share files with others.
- Large scale data analytics: Cloud storage can be used to store large amounts of data for analysis.
- Content delivery: Cloud storage can be used to store content such as images, video, and audio for delivery over the Internet.
What are the challenges of cloud storage?
While cloud storage offers many benefits, there are also some challenges to consider, such as the following:
- Internet connectivity: An Internet connection is required to access cloud-based data and services.
- Dependency on service providers: Users are reliant on their cloud service provider for security, availability, and performance.
- Lack of control: Users may have limited control over how their data is managed and stored by their cloud service provider.
- Cost: Although cloud storage can be more cost-effective than traditional on-premises storage, it can still be expensive, depending on the provider and service level chosen.
What are some common cloud storage services?
There are many cloud storage services available, including the following:
- Amazon Simple Storage Service (S3): Amazon S3 is a popular cloud storage service offered by Amazon Web Services (AWS). It is an object storage service that offers high levels of scalability, security, and availability.
- Google Cloud Storage: Google Cloud Storage is a cloud storage service offered by Google Cloud Platform. It offers high levels of scalability, security, and availability.
- Microsoft Azure Storage: Microsoft Azure Storage is a cloud storage service offered by Microsoft Azure. It offers high levels of scalability, security, and availability.
- Rackspace Cloud Files: Rackspace Cloud Files is a cloud storage service offered by Rackspace. It offers high levels of scalability, security, and availability.
In this article, we covered some of the best cloud computing companies on the market and their corresponding stocks. There are many different ways to profit from the industry.
So if you’re looking to invest in cloud computing, these are some of the best stocks to consider, as well as some of the most popular cloud ETFs.
For example, investors who want to profit from Salesforce’s cloud business could consider owning Salesforce stock, though they could also diversify to capture the overall trend by diversifying among several or simply owning a cloud ETF.