Slowdown In Cloud Stocks On Thin Ice Following Q1 Guides

Software-as-a-service (SaaS) and other cloud-based businesses have been particularly hard hit by the downturn, as investors turned to the safety of profitable stocks. As expected, these optimization efforts continued into the fourth quarter.” DOCN was founded in 2012, and is an up-and-comer in the cloud computing space. To be more specific, DigitalOcean offers a cloud computing platform for developers, start-ups and small-to-medium size businesses.

However, I determined that Dropbox’s long-term outlook is likely not as attractive as I originally anticipated as the strength of Microsoft’s bundle became clearer post-COVID. Perhaps Dropbox will follow a similar path as Slack and be an acquisition target, though that is not an investment thesis I want to rely on. Dropbox may still have a bright future, but as in any investing decision, when compared to other opportunities available at the time, I made the decision to reallocate to what I believed to be more attractive opportunities.” With plenty to look forward to in this high-growth industry, here are seven of the best cloud stocks to buy for 2022. Included on this list are some of the biggest users and providers of cloud services, as well as some relative newcomers. And all of the names featured here are well-liked by the analyst community.

Why Invest in Cloud Computing?

It also marked the largest drop in weekly jobless claims since November 2021. Continuing claims, or the number of people already collecting unemployment benefits, decreased by 8,000, largely unchanged at a total of 1.79 million. This suggests that unemployed workers are finding new positions quickly. Yet investor sentiment has been rising in recent weeks, as earnings season showed that the sky was not falling, contrary to popular belief.

What was most important for tech investors to realize, is that this is out of character for cloud, as Q4 is typically the strongest quarter. We concluded that this foreshadows a weaker-than-expected Q1 and also a weaker FY2023 than Cloud stocks was currently baked into estimates. It’s sometimes seen as a danger signal when a company is worth 10 times its revenue. The company, which went public in April 2019, has exploded by 600% from its IPO price of $36 per share.

The cloud and the companies that operate there are alive and well, whether a recession strikes or not.

By working in software, fast-growing customers can maintain a global footprint without having to invest in remote servers. This is a high-growth industry that’s being bid up to the … well, clouds. Valuations are sky-high, and pullbacks across the space certainly are possible. But the technology has staying power; companies won’t quickly ditch the benefits they’re capturing from cloud apps after offices re-open, if they ditch them at all. Thus, many cloud stocks’ opportunities should extend well into the future.

Kiplinger is part of Future plc, an international media group and leading digital publisher. Of the 10 analysts surveyed by Koyfin, three consider the stock a Strong Buy, five call it a Buy and only two think it’s a Hold. Not one of the analysts surveyed considers the stock a Sell or Strong Sell. Four analysts rate it a Strong Buy, nine say it’s a Buy, eight rate it a Hold, and only two have it a Strong Sell. For starters, the company has an overall Buy rating from Koyfin’s survey of 24 analysts. That includes five Strong Buy ratings, eight Buy ratings, nine Hold ratings, one Sell and one Strong Sell.

Key Highlights from the Cloud Hyperscalers:

Of course, with regard to cloud computing, HPE offers GreenLake Cloud Services. These provide HPE’s clients with an on-demand IT infrastructure to be used for machine learning (ML), big data, private cloud, data protection and more. Koyfin’s surveys also reveal a 16.1% 12-month return potential for HPE, based on analysts’ average price target of $17.50. And on top of that, the company currently pays a 2.9% dividend yield – more than double the yield of the S&P 500.

• It’s also a unified service that helps content creators collaborate with one another remotely, deploy their apps, market them, and manage them in real time.
• COUP is most famous for its innovative global payment technology, Coupa Pay, a platform for all its Business-to-Business (B2B) payments.
• Many companies invested heavily in the cloud during the pandemic and are now looking at ways to optimize resources.
• In a study by Markets and Markets, in 2020, the global cloud computing industry was estimated at $371.4 billion.
• Highly profitable and investing heavily to maximize expansion, Salesforce could realize founder and CEO Marc Benioff’s goal of becoming one of the world’s largest technology companies within the next decade.

Still, he finds The Trade Desk well-positioned as “advertisers continue their march toward digital outlets. Like radio and print before it, traditional television is being disrupted by a new medium.” While companies have been pulling back on ad spend throughout the pandemic, TTD delivered a 33% gain in revenues during the March quarter. Microsoft (MSFT, $203.85) offers a way for even the most conservative of investors to join the rush to cloud applications.

Here are the cloud stocks that do the best job of expanding business with existing clients

After recommending a stock, we continually provide new entries and exits. […] [Wedbush is] “seeing steady cloud enterprise spending for Microsoft that has stabilized from the softness we saw in the month of December.” The issue with this assumption is that Cloud growth is actually slowing down — that is the reality of things — and this wasn’t true in 2019 and hasn’t been true in the last decade. Couple this with weak bottom lines that require cash injections, and what get is a sector that is largely out of favor. “Companies want to get folks back into the office and schools long for the in-class experience, but there will now be a strong Zoom component to these businesses,” Milan says. And the pandemic has made Fastly one of the best-performing work-from-home (WFH) stocks at roughly 300% gains in 2020.

That includes a 270% performance in 2020 – a performance reminiscent of run-ups during the dot-com bubble. Zoom Video Communications (ZM, $252.33) is the poster child for what cloud applications can do for a portfolio, and one of the best cloud stocks of 2020. However, at the moment, it might also be signaling that the industry has entered a bubble phase. Twilio (TWLO, $252.86) is a communications platform-as-a-service (CPaaS) business. That means it lets developers quickly add voice, text and other services to their apps through the cloud.

Best Cloud Computing Stocks To Invest In

First-quarter earnings handily beat analyst estimates, says Gregg Moskowitz (Buy), software research analyst at Mizuho Securities. The company added 830 customers during the quarter, and 45% of all customers have adopted CRWD’s high-end Discover module, he said. https://investmentsanalysis.info/ But increasingly, applications are written for the cloud, that live entirely in the cloud, and/or even serve the cloud. Some companies – think Microsoft (MSFT) and its Office productivity suite – use cloud-based business models for older applications.

• The stock is rated an overall Strong Buy by Koyfin’s survey of 48 analysts.
• For investors not interested in attempting to pick the best cloud stocks, exchange-traded funds (ETFs) are also an option.
• This stock looks like a top cloud computing bet this month if you plan on holding for the next few years or more.
• More recently, it acquired a stake in hot IPO Monday.com (MNDY 4.56%).