Tech stocks have been brutalized in 2022, with few sectors spared from the market downturn. The growth of companies in cybersecurity, semiconductors, personal computer makers and smartphones have all slowed, and their stock prices have fallen. And yet, cloud computing stocks managed to outperform. According to the research firm Gartner, the public cloud sector grew by 20% in 2022, with the industry now worth around $500 billion, up nearly 2,000% from $26 billion a decade ago. This growth is truly impressive and indicates the speed at which companies are migrating their data to the cloud. Here are seven cloud computing stocks that can make you a millionaire as the phenomenon continues to thrive.
We’ll start with the largest cloud computing company in the world, Selling power (NYSE:RCMP). The company, which specializes in customer relationship management (RCMP), has had a tumultuous time over the past year, having been targeted by several activist investors and suffering the departure of several of its most senior executives. The turmoil impacted CRM stock, causing its price to plummet almost 60% between November 2021 and December 2022.
The good news is that CRM stock appears to have bottomed out last December at $126.34 per share. The company’s stock jumped 16% in a day after posting better-than-expected earnings and issuing a strong guidance. Earlier this month, Salesforce reported fourth quarter earnings per share (PES) by $1.68 from the $1.36 Wall Street analysts were expecting on average. Its fourth-quarter revenue jumped 14% year-on-year to $8.38 billion, versus an average analyst estimate of $7.99 billion.
Salesforce also announced that it is increasing its share buyback program to $20 billion from $10 billion previously. Looking ahead, Salesforce said it expects to report earnings in the range of $1.60-1.61 per share and revenue of $8.16-8.18 billion for the quarter. in progress.
That forecast was better than the $1.32 in earnings per share and $8.05 billion in revenue that analysts, on average, had anticipated. So it seems, for now, that Salesforce may have turned a corner.
All news about Microsoft (NASDAQ:MSFT) these days is about the company’s pivot to artificial intelligence, especially after it gobbled up $10 billion in the creator of ChatGPT OpenAI. However, all the AI hype obscures the fact that Microsoft remains a major player in the cloud computing space through its Azure unit.
According to a market research company StatesmanMicrosoft currently controls 23% of the global cloud infrastructure services market, second only to from Amazon (NASDAQ:AMZN) Web Services, which controls 32% of the market.
Revenue from Microsoft’s main cloud unit, Azure, as well as sales generated by the company’s “other cloud services”, jumped 31% year-on-year last quarter. The company, however, lowered its overall guidance, saying it now expects revenue for its current first quarter of $50.5 billion to $51.5 billion. That’s below the $52 billion in revenue that analysts had on average forecast for the current quarter.
However, the current MSFT slowdown is likely temporary and not unique to Microsoft. But in the long run, the tech giant and its shares remain a buy. Meanwhile, Microsoft’s commitment to cloud computing hasn’t changed, and it remains a force in the space.
MSFT stock is down 10% in the past 12 months.
Snowflake (NYSE:SNOW) offers cloud-based data storage and analysis services, often referred to as “data as a service”. The company had the misfortune to go public in September 2020 at the height of the Covid-19 pandemic. After initially rising 63% and peaking at just under $400 per share, SNOW stock fell 72% to $110 per share in June last year.
Despite the lack of earnings, Snowflake remains in fiery growth mode. In fiscal 2023, Snowflake’s revenue jumped 69% year-over-year. to $2.1 billion, bringing the company’s revenue growth to 680% over the past three years.
The company also has a number of notable fans, including famed investor Warren Buffett, who owns more than 6 million shares of the company, a stake worth nearly $850 million. In fact, Buffett participated in the Snowflake IPO, which he almost never does. Buy the SNOW dip.
As already mentioned, Amazon Web Services is the global market leader in cloud infrastructure services. Increasingly, Amazon Web Services is front and center for the e-commerce giant as the company continues to diversify its business.
In the company’s latest reported quarter, Amazon Web Services earned $21.4 billion, slightly less than the $21.87 billion that analysts, on average, had expected. In the last quarter of 2022, AWS grew 20% year-over-year, down from annualized growth of 27.5% in the prior quarter.
Despite AWS’s slowing growth, Amazon isn’t moving away from the cloud anytime soon. In fact, Amazon Web Services is now expanding to target AI developers.
AMZN stock is down 38% over the past 12 months.
International Business Machines Corp. (NYSE:IBM) has many business segments, including a large one that focuses on cloud computing. Last month, the company unveiled a new cloud-based supercomputer, hinting that IBM was developing an actual Skynet, the computer system that triggers Armageddon in “The Terminator” film franchise.
Histrionics aside, IBM is a formidable player in cloud computing, primarily through its subsidiary Red Hat, which provides open-source software products to businesses around the world.
The company also has a dedicated cloud business for the financial services industry. IBM now works with more than 130 financial companies through its “IBM Financial Services Cloud Council”. IBM says it is working to build greater compliance and security into its cloud offerings.
This is exactly what financial companies want.
Veeva Systems (VEEV)
Veeva systems (NYSE:VEEV) is a lesser-known, niche-focused cloud computing company. Founded in 2007 and publicly traded since 2013, Veeva Systems is a cloud computing company focused on the pharmaceutical and life science industries.
The company defines itself as “software as a service in the life sciences industry”. And although it’s less well-known than the other names on this list, VEEV stock has quietly outperformed over the past decade.
So far in 2023, VEEV stock has gained 5%. Over the past five years, the stock has grown an impressive 125%.
Since entering the market ten years ago, the share price has nearly tripled. The key to the company’s success is that its cloud-based solutions are extremely valuable and loyal to its customers.
Indeed, Veeva’s offerings enable its offerings to succeed in the highly regulated and capital-intensive healthcare industry.
Additionally, companies cannot switch cloud-based software vendors without disrupting their business and incurring high costs. Veeva System customers are therefore likely to remain loyal to the cloud company.
Alphabet (NASDAQ:GOOG /NASDAQ:GOOGL) is a bit of an outlier in the cloud computing space. The company’s Google Cloud business is growing at a healthy pace but remains unprofitable.
With a current market share of 10%, Google Cloud ranks third in the world behind Amazon and Microsoft. Google Cloud lost nearly $700 million in the third quarter of last year alone. However, Google Cloud is growing, as its sales and revenue have been climbing for several years.
And Alphabet remains fully committed to its cloud offering. While the company has shut down other unprofitable divisions such as its Stadia video game unit, the tech titan continues to invest in Google Cloud’s growth, primarily through acquisitions.
Alphabet acquired cybersecurity firm Mandiant last September for $5.4 billion, marking one of its biggest purchases ever. Mandiant promises to beef up Google Cloud’s security features at a time when remote workers have grown to 60% of the US workforce.
GOOGL stock is down 25% in the past 12 months, giving it an attractive price-earnings ratio of 20.