Tech stocks were brutalized in 2022, with few sectors spared by the market downturn. The growth of firms in the cybersecurity, semiconductors, personal computer makers and smartphone sectors all slowed, and their share prices pushed lower. And yet, cloud-computing stocks managed to outperform. According to research firm Gartner, the public-cloud sector grew 20% in 2022, with the industry now worth about $500 billion, up nearly 2,000% from $26 billion a decade ago. That 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 boom.
We’ll start with the world’s largest cloud computing company, Salesforce (NYSE:CRM). The company, which specializes in customer relationship management (CRM) software, has had a tumultuous time over the past year, having been targeted by several activist investors and having endured the departure of several of its most senior executives. The turmoil has impacted CRM stock, pushing its price down nearly 60% between November 2021 and December 2022.
The good news is that CRM stock appears to have bottomed last December at $126.34 per share. The company’s stock jumped 16% in one day after it delivered better-than-expected earnings and issued strong guidance. Earlier this month, Salesforce reported fourth-quarter earnings per share (EPS) of $1.68 compared to the $1.36 that Wall Street analysts, on average, had expected. Its Q4 revenue jumped 14% year-over-year to $8.38 billion, versus analysts’ average estimate of $7.99 billion.
Salesforce also announced that it was raising its stock buyback program to $20 billion, up from $10 billion previously. Looking forward, Salesforce said that it expects to report earnings in the range of $1.60 to $1.61 per share and revenue of $8.16 billion to $8.18 billion for the current quarter.
That guidance was better than the $1.32 in earnings per share and $8.05 billion of revenue that analysts, on average, had anticipated. So it looks, for the time being, like Salesforce may have turned a corner.
All the news pertaining to Microsoft (NASDAQ:MSFT) these days is about the company’s pivot to artificial intelligence, especially after it sunk $10 billion into ChatGPT creator OpenAI. However, all the hype surrounding AI obscures the fact that Microsoft remains a major player in the cloud-computing space through its Azure unit.
According to market research firm Statista, Microsoft currently controls 23% of the global cloud infrastructure services market, second only to Amazon’s (NASDAQ:AMZN) Web Services, which controls 32% of the market.
The revenue of Microsoft’s main cloud unit, Azure, along with the sales generated by the firm’s “other cloud services,” jumped a cumulative 31% year-over-year last quarter. The company, however did lower its overall forward guidance, saying it now expects revenue for its current first quarter of $50.5 billion to $51.5 billion. That is below the $52 billion of revenue that analysts, on average, had penciled in for the current quarter.
MSFT’s current slowdown, however, is temporary for sure and not unique to Microsoft. But over the long term, the tech giant and its stock remain a buy. Meanwhile, Microsoft’s commitment to cloud computing has not changed, and It remains a force in the space.
MSFT stock is down 10% over the past 12 months.
Snowflake (NYSE:SNOW) offers cloud-based data storage and analytics services that are often referred to as “data-as-a-service.” The company had the misfortune to go public in September 2020 during the depths of the Covid-19 pandemic. After initially running up 63% and peaking at just under $400 a share, SNOW stock pulled back 72% to bottom at $110 a share in June of last year.
Despite the lack of profits, Snowflake remains in red-hot growth mode. In fiscal 2023, Snowflake’s revenue jumped 69% year-over-year. to $2.1 billionThat brings the company’s revenue growth over the past three years to 680%.
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 got in on Snowflake’s IPO, something he almost never does. Buy the dip of SNOW.
As already mentioned, Amazon Web Services is the global leader of the cloud infrastructure services market. Increasingly, Amazon Web Services is a primary focus of the e-commerce giant as the company continues to diversify its business.
In the company’s most recently reported quarter, Amazon Web Services earned $21.4 billion, which was just under the $21.87 billion that analysts, on average, had expected. During the final quarter of 2022, AWS grew 20% year-over-year, down from annualized growth of 27.5% in the previous quarter.
Despite the slowdown of AWS’ growth, Amazon is not pivoting away from the cloud anytime soon. In fact, Amazon Web Services is now expanding to target artificial intelligence developers.
AMZN stock has declined 38% over the past 12 months.
International Business Machines Corp. (NYSE:IBM) has many business segments, including a sizable one that is focused on cloud computing. Last month, the company unveiled a new supercomputer that is based in the cloud, leading to speculation that IBM was developing a real-life Skynet, the computer system that triggers Armageddon in “The Terminator” film franchise.
Histrionics aside, IBM is a formidable player in the cloud computing space, primarily through its Red Hat subsidiary that provides open-source software products to enterprises around the world.
The company also has a cloud business that’s dedicated to the financial services sector. IBM today works with more than 130 financial firms through its “IBM Financial Services Cloud Council.” IBM says it is working to incorporate greater compliance and security into its cloud offerings.
That’s exactly what financial firms want.
Veeva Systems (VEEV)
Veeva Systems (NYSE:VEEV) is a lesser-known cloud computing company with a niche focus. Founded in 2007 and publicly traded since 2013, Veeva Systems is a cloud-computing company that focuses on the pharmaceutical and life-sciences industries.
The company refers to itself as a “software as a service in the life science industry.” And while it is lesser known than the other names on this list, VEEV stock has been a quiet outperformer over the past decade.
So far in 2023, VEEV stock has gained 5%. Over the past five years, the stock has increased an impressive 125%.
Since its market debut ten years ago, the share price has nearly tripled. Key to the company’s success is that its cloud-based solutions are extremely valuable and sticky with its clients.
That’s because Veeva’s offerings allow its offerings to succeed in the heavily regulated, capital intensive healthcare industry.
Also, companies cannot switch their cloud-based software providers without disrupting their businesses and incurring high costs. So Veeva System’s customers are likely to stick with the cloud company.
Alphabet (GOOG / GOOGL)
Alphabet (NASDAQ:GOOG / NASDAQ:GOOGL) is a bit of an outlier in the cloud-computing space. The firm’s Google Cloud business is growing at a brisk clip but remains unprofitable.
With a current market share of 10%, Google Cloud is in third place globally behind Amazon and Microsoft. Google Cloud lost nearly $700 million in last year’s third quarter alone. However, Google Cloud is growing, as its sales and revenue have been climbing forseveral years .
And Alphabet remains fully committed to its cloud offering. While the company has closed other unprofitable divisions such as its Stadia video game unit, the tech titan continues to invest in the growth of Google Cloud, primarily through acquisitions.
Alphabet acquired cybersecurity firm Mandiant last September for $5.4 billion, marking one of its biggest ever purchases. Mandiant promises to bolster Google Cloud’s security functions at a time when remote workers have grown to 60% of the U.S. workforce.
GOOGL stock is down 25% over the last 12 months, giving it an attractive price-earnings ratio of 20.