Best Cloud Computing Stocks to Invest
Cloud industry provides massive opportunities for investors because of its fast growing market. According to the latest forecast from the International Data Corporation (IDC), total cloud shift in 2016 has already reached to $38 billion, increased by 15.5%. And the double digit growth will continue at a 13.1% compound annual growth rate to $59.5 billion in 2020 (IDC). But the real opportunity for investors is that only a few winners will dominate the supply side of the market.
Why is the Cloud Computing so Important?
Cloud computing has a subscription-based model and therefore the customer needs much lower capital expenditure, i. g.: hardware, physical space. The costs, like upgrade and maintenance, are included in subscription fee but they are very low compared to traditional IT, thanks to scale up effect.
Cloud computing can better adapt itself to changing business conditions. If the company expands, grows or gets smaller cloud computing can easily scale up or down.
The stored data can be accessed from anywhere anytime.
The clients can easily share information with each other with less cost.
Because of reasons mentioned above, cloud computing enables better collaboration for customers team.
Small businesses can afford same cloud services provided to big companies. And therefore expensive IT structure will not be a competitive advantage for big companies against smaller competitors anymore.
The customer’s data can be better protected. And in a case of losing data, the recovering with cloud computing is much easier and cheaper.
Major Players in the Industry:
Almost everybody uses the cloud platforms, i. g.: Facebook, Twitter, Youtube, Gmail etc.. But there are some companies which will take the most benefits from cloud shift:
IBM cloud includes infrastructure as a service (IaaS), software as a service (SaaS) and platform as a service (PaaS) offered through public, private and hybrid cloud delivery models. IBM offers those services under SmartCloud Foundation, SmartCloud Services, and SmartCloud Solutions.
Better security and transparency: clients can exactly know and be in control over what does or doesn’t move in their network. This is especially important for large financial institutions and other regulated industries.
Integration of cloud platforms with cognitive solutions: clients can have access to analytics and cognitive capabilities (artificial intelligence). Hybrid solutions for large enterprises and superior analytics and cognitive SaaS portfolio are where IBM tries to gain competitive advantage and economic moat.
Cloud computing is gradually displacing the computers and software programs and services that IBM has sold for years. If IBM cannot take a strong position in cloud computing the company will have no future. Because of that, IBM is heavily investing and aggressively adding data centers.
“By definition, anything they do in cloud is cannibalizing their own business.”
Bernstein analyst Toni Sacconaghi
Eventually, IBM is No. 4 in cloud business behind Amazon, Microsoft and Alphabet in share of cloud revenue.
Since 2006, Amazon’s subsidiary Amazon Web Services (AWS) offers on-demand cloud computing platforms, Amazon Elastic Compute Cloud (EC2, an IaaS service) and Amazon Simple Storage Service (S3), including compute, storage, networking, database, analytics, application services, deployment, management, mobile, developer tools and tools for the Internet of things.
The Company has decades of experience from e-commerce platforms to build reliable and scalable web infrastructure. As a provider of digital goods, Amazon uses cloud technology for a long time and has excess capacity but the company considers AWS as a business itself.
Jeff Bezos, SEO of Amazon, in an interview with Wired magazine said:
” ….. we wanted the data-center guys to give the apps guys a set of dependable tools, a reliable infrastructure that they could build products on top of. The problem was obvious. We didn’t have that infrastructure. So we started building it for our own internal use. Then we realized, “Whoa, everybody who wants to build web-scale applications is going to need this.” We figured with a little bit of extra work we could make it available to everybody. We’re going to make it anyway—let’s sell it.”
The Company has the highest revenue in the market and is a pioneer in the cloud business. Last year, 2016, Amazon Web Services (AWS) division generated $12,2 Billion revenue, $3,1 Billion profit (47% growth) – more than twice the growth of the company as a whole. “Cloud computing really has been fueling its earnings growth, … It really helps ensure profitability every quarter now.” said Louis Navellier, chairman of investment firm Navellier & Associates. The company traditionally has very slim margins but thanks to growing AWS, Amazon’s overall profit margin increases. AWS seems like an unstoppable success now.
Amazon as a tech giant has five times more computing capacity available than the combined total of other service providers.
Amazon’s billing system is confusing and customer support is not free which means extra costs for customers. Many small and mid-size enterprises are unable to get the support and guidance of an AWS representative.
Microsoft’s cloud computing service Azure provides software as a service, platform as a service and infrastructure as a service and supports many different programming languages, tools, and frameworks, including both Microsoft-specific and third-party software and systems.
After Amazon, Microsoft is the second player in the cloud business.
95% of businesses globally run on Windows Server Active Directory and Windows Server has 75% market share in business servers. The same businesses would prefer to use the same service by shifting to Azure.
Microsoft also provides business intelligence (BI) and machine learning (ML) services for its Azure customers.
Over 57% of Fortune 500 companies are using Azure. And Azure has more revenue growth than its competitors.
Cloud services can contribute to overall economies of scale but if the company cannot keep its strong position in cloud business Microsoft can lose its economic moat in the long run because it operates in highly competitive and continuously changing markets.
GET UPDATES VIA EMAIL
Sign up Now
Google Cloud Platform provides a set of modular cloud-based services with a host of development tools, i. g.: hosting and computing, cloud storage, data storage, translations APIs and prediction APIs.
Google Cloud Platform is already hosting 4 million applications. But the company is in the third place behind Amazon Web Services and Microsoft Azure.
Google already has tremendous expertise in both computing infrastructure and security, thanks to products like Gmail, youtube, google maps etc.
Google also offers aggressive usage discounts: the more customers use Google the steeper the discounts.
The Company’s artificial intelligence technology is one of the best in the business.
Some of the Google’s big customers: Coca-Cola, General Mills, Best Buy, The Home Depot, Spotify, Apple iCloud, Snapchat, Disney, and PricewaterhouseCoopers.
Google is particularly strong in the processing of Big Data. BigQuery, one Google’s service, can analyze massive amounts of data in short time and provide real-time insights.
Google has much better billing system than AWS.
Google Cloud Platform is mostly focused on classic IaaS and PaaS services and has a short product list.
Eventually, Google’s revenue, despite the high growth, is only ~10% of AWS’s revenue.
Cloud Market is growing very fast and the competition is very tough but the Companies are very innovative. Apparently, the key factor is the strength in artificial intelligence technology which is very important for big data processing, i. g.: product suggestions, text, image, and voice recognizing etc..
No Investment or Financial Advice.