SPECIAL REPORT The Top 7 Stocks for 2024

The 3 Best Cloud Computing Stocks to Buy in February 2024

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  • Investors looking for exposure to cloud computing may want to consider these stocks.
  • Amazon (AMZN): Artificial intelligence is strengthening the demand for the company’s cloud computing solutions.
  • Alphabet (GOOG, GOOGL): Cloud computing is helping the firm achieve higher revenue growth rates.
  • ServiceNow (NOW): The company helps clients increase their productivity and has an impressive 99% renewal rate for its platform.
best cloud computing stocks - The 3 Best Cloud Computing Stocks to Buy in February 2024

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Cloud computing has helped corporations increase productivity and reduce costs. Once a business uses cloud computing, it continues to pay annual fees to keep its digital infrastructure.

Cloud solutions can quickly turn into a company’s backbone. It’s one of the last costs some companies will think of removing. Firms that operate in the cloud computing industry often benefit from high renewal rates, recurring revenue and the ability to raise prices in the future. Investors can capitalize on the trend with these cloud computing stocks.

Amazon (AMZN)

Closeup of the Amazon logo at Amazon campus in Palo Alto, California. The Palo Alto location hosts A9 Search, Amazon Web Services, and Amazon Game Studios teams. AMZN stock
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Amazon (NASDAQ:AMZN) had a record-breaking Black Friday and optimized its logistics to offer the fastest delivery speeds ever for Amazon Prime members. Over seven billion products arrived at people’s doors on the same or the next day or the order. It’s a testament to Amazon’s vast same-day delivery network that encompasses 110 U.S. metro areas and more than 55 dedicated same-day sites across the United States.

The delivery network makes Amazon Prime more enticing for current members and people on the fence. The company’s efforts paid off and resulted in 14% year-over-year (YoY) revenue growth in the fourth quarter of 2023.

Amazon’s ventures into artificial intelligence (AI) can also lead to meaningful stock appreciation. The company’s generative AI investments have paid off and strengthened Amazon Web Services’ value proposition. Developers can easily scale AI apps with Amazon’s Bedrock. These resources can help corporations increase productivity and generate more sales.

Innovations like these will help Amazon generate more traction for its e-commerce and cloud computing segments. The AI sector has many tailwinds that can help Amazon stock march higher for long-term investors.

Alphabet (GOOG, GOOGL)

Alphabet Inc. (GOOG, GOOGL) and Google logos seen displayed on smartphones. The Google stock split is happening today.
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Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is a staple in many funds. The equity has outperformed the broader market with a 58% gain over the past year. Shares are up by 170% over the past five years.

Shares trade at a reasonable 22x forward P/E ratio. The stock initially lost some value after earnings but has parried some of its losses. The earnings report wasn’t too bad, with 13% YoY revenue growth and 52% YoY net income growth.

Investors may have wanted higher numbers since Meta Platforms (NASDAQ:META) reported better results. However, a 7% drop in earnings didn’t make much sense. The business model is still robust and is accelerating revenue and earnings growth. Alphabet also has a lengthy history of rewarding long-term investors.

Many analysts believe the equity looks like a solid long-term buy. The average price target implies a 9% upside. The highest price target of $175 per share suggests the equity can rally 16.5% from current levels.

ServiceNow (NOW)

ServiceNow office building in Silicon Valley;
Source: Sundry Photography / Shutterstock.com

ServiceNow (NYSE:NOW) is an information technology company with an advanced cloud platform that helps corporations increase their productivity and sales. The equity has comfortably outperformed the market with 1-year and 5-year gains of 77% and 248%, respectively.

The company currently trades at a 61x forward P/E ratio, meaning you’ll need a long-term outlook to justify the valuation. ServiceNow certainly delivers on the financial front, increasing revenue by 26% YoY in Q4 2023. ServiceNow also reported $295 million in GAAP net income, a 97% YoY improvement. The company generated $150 million in GAAP net income during the same period last year.

Revenue is going up, and profit margins are accelerating. These are two promising signs for a company that boasts a 99% renewal rate for its core product. The company’s subscription revenue continues to grow at a fast clip and generates predictable annual recurring revenue.

On this date of publication, Marc Guberti held a long position in NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.


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