It’s no secret that “the cloud” has been one of the biggest buzzwords in the tech industry of late, especially as leading cloud players have shimmied out onto the public markets.
But despite optimism about the mega-trend of distributed computing, several big names in the space have been struggling of late. Let’s take a look at some of the most prominent cloud headlines and stock movements from recent weeks:
Alibaba (BABA)
Alibaba (BABA) is anything but a core cloud play, but a recent announcement did improve its cloud story, as Barb Darrow at Fortune reported last week.
Alibaba — or to be more specific, its cloud arm Aliyun — just struck a deal with data center giant Equinox. Equinox operates more than 105 data centers across the globe, and the deal is appealing for multi-national customers that want to do business in both the U.S. and China (and want their data to be in cloud but within the country of business).
While BABA stock isn’t a pure cloud pick, it’s recent performance sure makes it look like one. After bursting onto the public markets in one of 2014’s most highly anticipated debuts, shares are currently sitting a sad 13% in the red.
If you believe in Alibaba long-term, though, that just might be a good buying opportunity. BABA stock currently sports a forward price-to-earnings ratio of just 23 versus expected earnings growth of 29% per year over the next half decade.
Rackspace (RAX)
Misery loves company. The next name on this list is a far more traditional cloud pick, but it has similar year-to-date struggles as BABA stock. Rackspace (RAX) stock hasn’t been able to recover since falling off a cliff last month, with shares sitting 15% in the red year to date despite a strong start.
Things went south big time on May 14 after a sales miss in the first quarter, a lowered Q2 sales target and concerns about competition from Amazon (AMZN) sent RAX stock an ugly 14% lower in just one day.
Since then, it’s been nothing but analyst downgrades and continued bleeding.
Amazon (AMZN)
Speaking of Amazon, the company’s cloud arm also made headlines of late … this time for unhappy customers. As The Wall Street Journal reported, “customers are demanding that the tight-lipped company open up about AWS’ electricity consumption.” More specifically, just under customers signed a letter to the AWS head honcho asking for more detail about energy “footprints and goals.”
That’s small news for Amazon stock overall of course, which has chugged an impressive 37% year-to-date, laughing at BABA and RAX along the way.
Workday (WDAY)
We’re back to bad news and bad performance for our last cloud stock of this round-up. Workday (WDAY), like Rackspace, started 2015 off pretty strong but hit a big, big bump in May.
The details: WDAY stock suffered an 11% one-day drop late in the month despite posting an earnings beat. But as The Motley Fool pointed out, and as is the case for all of these cloud stocks, “Workday is a stock with a valuation mostly supported by extreme optimism.”
That means the slightest red flag — in this case a big drop in billings growth — can mean pools and pools of red.
But if you think Workday just needs some better leadership, maybe you should snatch up shares. The company Workday announced three big-time executive appointments last week in an effort to accelerate sales growth.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.
