Cloud computing has been a boon for companies and investors. Instead of companies having to store their own servers, they can use a digital cloud powered by a data center.  Cloud computing is convenient for small businesses because it allows them to save money instead of gathering the necessary resources themselves. Many corporations also use cloud computing, and once you use a service provider, switching is very cumbersome. This is a boon for cloud stocks.

Artificial intelligence can strengthen cloud computing’s capabilities, making it an even more compelling choice for businesses.

The cloud computing industry is set to expand, and analysts feel confident that these top-rated cloud stocks will thrive.

ServiceNow (NOW)

ServiceNow (NYSE:NOW) helps enterprise customers use cloud solutions to increase productivity. The company’s workflows help to accelerate digital transformations, deliver frictionless customer experiences, boost employee productivity, and build connected cross-enterprise workflow apps that enable hyper-automation. 

The company is loaded with cash and generated $2.2 billion in free cash flow in Fiscal Year 2022. The company has been building on that success in 2023. ServiceNow reported 25% year-over-year revenue growth in the third quarter and more than tripled its revenue during the same amount of time. 

Profit margins are expanding, and the company’s 98% renewal rate for the quarter suggests revenue will continue to grow. Leadership felt good enough about the results to raise 2023 subscription revenues and operating margin guidance.

ServiceNow has incorporated generative AI across all workflows in its Vancouver Platform release. According to the ServiceNow Q3 press release, this addition will help clients “further maximize productivity, improve agility, and drive cost efficiency.”

ServiceNow has been an exceptional performer in the stock market. Shares have gained 73% year-to-date and are up by 317% over the past five years. 

Okta (OKTA)

Cloud computing involves putting more digital assets online. While this increases efficiency and makes key documents more accessible for employees, it also makes them more vulnerable to hackers. That’s why cybersecurity services have been gaining popularity alongside cloud computing solutions.

Okta (NASDAQ:OKTA) offers cloud services that help businesses keep sensitive information safe. Many cybersecurity companies fulfill this function, but Okta has recently suffered from bad press, which presents a buy-the-dip opportunity.

The bad press for the cybersecurity firm is much deserved. About a month ago, hackers got into Okta’s system and accessed client files. It’s not a good look for a cybersecurity company, but no company is invincible to hackers. If there is a single hole, hackers can exploit it. Luckily, Okta figured out what created the opening.

Okta recently blamed the debacle on an employee who used a personal Google account on a company laptop. It’s a legitimate reason why the hacks took place. Okta can use this experience to strengthen its protocols and controls to minimize the likelihood of this type of incident happening in the future. 

Okta was a massive winner during the pandemic but shows a relatively unimpressive 36% gain over the past five years. The company is only up by 3% year-to-date and is still trading lower than it did when the back was announced.

The issue has been patched, and Okta knows how to address the situation in the future. People will soon forget about these hacks and remember that the company delivers high revenue growth rates and is getting closer to profitability. 

Okta is rated as a “Moderate Buy” with an average price target of $90.73 from 28 analysts.

Oracle (ORCL) 

Oracle (NYSE:ORCL) is the oldest company on this list and has been around since 1977. The software company offers cloud computing services and helps companies increase their efficiency.

Oracle doesn’t have as much revenue growth as the other two stocks on this list. In the first quarter of Fiscal 2024, revenue inched up by 9% year-over-year. The company’s cloud revenue grew by a more impressive 30% year-over-year. 

Cloud revenue was $4.6 billion of the company’s $12.5 billion in total revenue. Investors can expect higher total revenue growth in the future as cloud computing becomes a larger segment of the business. Right now, cloud revenue makes up more than a third of the company’s total revenue.

Unlike many cloud stocks, Oracle offers a 1.40% dividend yield and a valuation that isn’t completely out of the stratosphere. Oracle trades at a 34 P/E ratio which is lower than many cloud companies’ forward P/E ratios. The firm also has a 21-forward P/E ratio based on its accelerating net income growth.

Oracle is rated as a “Moderate Buy” with an average price target of $130.44 from 25 analysts.

On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.