3 Cloud Computing Stocks to Buy as the Digital Shift Expands As the digital shift accelerates, the cloud computing market offers significant investment potential, driven by increasing digital transformation, rising infrastructure spending, and the adoption of AI. With these trends in...
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As the digital shift accelerates, the cloud computing market offers significant investment potential, driven by increasing digital transformation, rising infrastructure spending, and the adoption of AI. With these trends in mind, investors could consider fundamentally strong cloud computing stocks like Amazon.com (AMZN), Oracle (ORCL), and Salesforce (CRM) as the digital economy continues to expand. Keep reading.
Amid widespread digital transformation continues, cloud services have become essential for security and scalability. This trend presents significant investment opportunities in the cloud computing market, making companies Amazon.com, Inc. (AMZN), Oracle Corporation (ORCL), and Salesforce, Inc. (CRM) attractive prospects for investors looking to capitalize on the evolving digital landscape.
The cloud market is experiencing strong growth, fueled by remote work, digital transformation, and intense competition among cloud hyper-scalers. According to Statista, the global public cloud computing market is set to skyrocket to $675 billion by 2024.
Additionally, industries such as e-commerce, healthcare, and finance are heavily adopting cloud solutions to improve customer experiences, drive innovation, and stay competitive. According to IDC, cloud infrastructure spending is projected to grow at a double-digit rate, reaching $213.7 billion by 2028, highlighting the cloud's increasing significance.
Considering these conducive trends, let's examine the cloud computing stocks in detail.
Amazon.com, Inc. (AMZN)
AMZN operates globally through its retail, advertising, and subscription services. It operates through three segments: North America, International, and Amazon Web Services (AWS).
On October 16, 2024, AMZN unveiled a new lineup of Kindle devices, including the first-ever color Kindle, a revamped Kindle Scribe, the fastest Kindle Paperwhite, and a new entry-level Kindle in a fresh Matcha color.
On October 8, Amazon Web Services (AWS) revealed a partnership with Smartsheet to introduce a new connector that links Smartsheet data with Amazon Q Business. This integration allows users to gain project insights and improve decision-making via AWS's generative AI-powered assistant, optimizing workflows across various business applications.
During the fiscal second quarter that ended June 30, 2024, AMZN's total net sales increased 10.1% year-over-year to $147.98 billion. Its operating income grew 91% from the year-ago value to $14.67 billion. In addition, the company's net income and EPS came in at $13.49 billion and $1.26, up 99.8% and 93.8% over the prior-year quarter, respectively.
Analysts expect AMZN's EPS and revenue for the quarter ended September 30, 2024, to increase 20.9% and 9.9% year-over-year to $1.14 and $157.24 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 47.5% to close the last trading session at $188.99. It soared 24.4% year-to-date.
AMZN's POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AMZN has a B grade in Sentiment, Momentum, and Quality. It is ranked #15 out of 53 stocks in the B-rated Internet industry.
Beyond what we have stated above, we also have given AMZN grades for Growth, Value, and Stability. Get all the AMZN's ratings here.
Oracle Corporation (ORCL)
ORCL offers products and services that address enterprise information technology environments worldwide. The company provides cloud software applications, cloud-based industry solutions, application licenses, infrastructure technologies, databases, Java, middleware, hardware products, and consulting and customer services.
On October 9, ORCL introduced new AI-powered features in Oracle Fusion Cloud Service and Oracle Fusion Cloud Field Service to boost service team productivity, enhance issue resolution, and improve customer service. These updates aim to increase customer satisfaction by automatically diagnosing issues, suggesting actions, streamlining resolutions, and improving first-time fix rates.
In the fiscal first quarter ended August 31, 2024, ORCL's total revenues increased 6.9% year-over-year to $13.31 billion. Its operating income was $3.99 billion, up 21.1% from the year-ago value. Moreover, its net income and EPS stood at $2.93 billion and $1.03, respectively, representing increases of 21% and 19.8% over the prior-year quarter.
Street expects ORCL's revenue and EPS for the quarter ending November 30, 2024, to increase 9.1% and 10.7% year-over-year to $14.12 billion and $1.48, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock climbed 65.7% year-to-date and 61.4% over the past year, to close the last trading session at $174.69.
ORCL's POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Sentiment and a B for Stability and Growth. It is ranked #35 out of 131 stocks in the Software – Application industry.
To access ORCL's Growth, Value, Sentiment, and Momentum ratings, click here.
Salesforce, Inc. (CRM)
CRM provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. It supports third-party development and offers global sales, service, and subscription services, enabling data storage, lead tracking, and issue resolution.
On September 17, CRM announced a strategic partnership with NVIDIA Corporation (NVDA) to co-develop advanced AI features and interactive avatar experiences for Salesforce's Agentforce and NVIDIA's AI platform, aiming to enhance insights and productivity across sales, service, marketing, and IT teams.
That same day, CRM and Google Cloud expanded their partnership to develop Salesforce Agentforce Agents, enabling secure collaboration between Salesforce Customer 360 and Google Workspace applications.
CRM's total revenue increased 8.4% year-over-year to $9.33 billion in the fiscal 2025 second quarter that ended on July 31, 2024. Its non-GAAP net income came in at $2.49 million, up 19.1% year-over-year, while its non-GAAP net income per share grew 20.8% from the year-ago value to $2.56. Its free cash flow increased 20.2% year-over-year to $755 million.
For the fiscal year 2025, the company's non-GAAP operating margin is projected to be 32.8%, with EPS anticipated to fall between $6.05 and $6.13. CRM expects total revenue to range between $37.7 billion and $38 billion, representing a growth of 8%-9%.
Street expects CRM's revenue for the fiscal third quarter (ending October 2024) to increase 7.2% year-over-year to $9.35 billion. Its EPS for the same quarter is expected to grow 15.9% from the prior year to $2.45. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is promising.
Shares of CRM have gained 43% over the past year and 16.1% over the past month to close the last trading session at $292.94.
CRM's bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality. Within the Software- Application industry, it is ranked #20.
Click here to see CRM's ratings for Growth, Value, Momentum, and Stability.
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AMZN shares fell $0.79 (-0.42%) in premarket trading Monday. Year-to-date, AMZN has gained 24.38%, versus a 24.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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