VMware, Inc. (NYSE:VMW) may not be one of the first companies that comes to mind when you’re thinking about cloud services stocks. But, it should be.
Believe it or not, VMW is one of the top enterprise cloud services and virtualization companies out there. And, its growth up to now, while impressive, is just the beginning. In the past 12 months, VMW stock has almost doubled.
That sounds compelling, but the underlying story is what makes VMW’s rise something you should understand, especially if you’re looking for exposure in this massively disruptive market.
Simply put, cloud computing means that your computer doesn’t need to have individual software packages for each specific job you want it to do. In the old days, you ran a word processing program, a spreadsheet program, a design program, etc. And, every machine had to have its individual software suite.
The rise of networked computers meant that all of this software could be stored on a network “library” and each user could access what they needed.
The next iteration of these networks were housed in the “cloud,” which simply implies a virtual space built into servers. One of the primary advantages is the ability to access your information from the cloud, regardless of where you are or what computer you’re using.
Cloud computing has been around for a long time, and companies such as Alphabet Inc (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), Oracle Corporation (NYSE:ORCL) and Amazon.com, Inc. (NASDAQ:AMZN) have been using the cloud for many years.
Now, companies of all sizes are migrating to the cloud, and within the cloud universe there both public clouds (where many people have access) and private clouds (where only select people have access). VMW provides the ability to develop each of these systems, and also facilitates unique access between public and private clouds.
Why Don’t We Hear Much About VMware?
VMWare is actually owned by Dell Technologies Inc (NYSE:DVMT) subsidiary, EMC Corporation (NYSE:EMC). Last April, Dell bought EMC to become the largest privately-held tech company in the world. So, VMWare is a cloud-based, publicly-traded branch of this major tech player now.
Part of the reason you don’t hear about VMWare as much as its competitors is because the company’s relationship to its owners is a bit convoluted, and analysts aren’t very confident in figuring out how to value VMW stock. Their loss is your gain.
Q4 and full-year numbers were posted in late January, and they show how strong VMW stock remains. Earnings beat analyst expectations and revenue continued to grow at a solid clip. A new strategic partnership with AMZN’s cloud-computing juggernaut, Amazon Web Services (AWS), adds some serious firepower to the VMW arsenal. It also helps the company remain competitive in a very dynamic field.
When you have a tech parent like EMC and a tech partner like AWS, you are doing very well. These brands are major players in the enterprise sector and will open even more doors for VMW in the future. VMWare stock is on a significant growth trajectory that should last years, not months.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.