Cloud-enabled quantum computing will alter industries by providing unprecedented processing speeds for difficult problem-solving and enhancing quantum capabilities via cloud platforms. As a result, cloud computing stocks will continue to rise, and astute investors will avoid them at their peril.
The cloud computing industry is still expanding, with a market size growth of $76 billion in the first quarter of 2024 alone. With an annual growth rate of around 20.4%, the industry is predicted to reach $678.8 billion by 2024 from its current size. Looking ahead, the market will possibly reach $1.44 trillion by 2029, showing a compound annual growth rate of around 16.40% throughout the projected period.
North America continues to lead in market share, mostly due to big cloud stocks with headquarters here. Still, the Asia-Pacific area shows notable development, particularly in China, with a fast increase in cloud infrastructure investment.
The three “Strong Buy” cloud stocks we’ll explore come from these fast-growing regions. All of these cloud stocks have double-digit upside and are aggressively building out their cloud computing portfolios.
Amazon (AMZN)
Amazon‘s (NASDAQ:AMZN) stock is up 44% over the last year, thanks partly to its comeback in its cloud business, recovery in online shopping and push for artificial intelligence. Analysts do not expect the party to end for AMZN anytime soon, forecasting a 15.5% upside from the current price, making it a quality pick among cloud stocks.
Amazon Web Services leads the global cloud infrastructure services market with a 31% market share and an annual revenue run rate approaching $100 billion. AWS’s first-quarter 2024 revenue was $25 billion, up 17%.
In 2024, Amazon will undertake various division projects to boost its cloud computing products and market position. Additionally, AWS’s capital spending on infrastructure development, including generative AI, will “meaningfully increase” in 2024.
AWS is giving $50 million to the Generative AI Impact Initiative, which is aimed at groups in the public sector. This two-year program aims to help these companies speed up their growth by using AWS’s creative AI services and infrastructure.
AWS released Amazon Bedrock in October 2023. This managed service provides a single API for large language models from major AI organizations. Amazon Bedrock allows model tweaking, multistep generative AI tasks and safeguards.
AWS also introduced five capabilities to manage the machine learning service Amazon SageMaker. The new SageMaker capabilities support AWS’s aim to provide high-performance machine learning technology at a reasonable price.
Datadog (DDOG)
Datadog (NASDAQ:DDOG) is up around 14% this year thanks to its growing client base and profit margins. Analysts forecast DDOG to grow further from here, with a consensus 12-month price target of $147.13, indicating a potential upside of 12.5%.
DDOG announced strong financial results for the first quarter of 2024, with $611 million in sales, a 27% year-over-year rise. The company also saw a big surge in bigger customers. There are now about 3,340 customers with annual recurring revenue of $100,000 or more, up from about 2,910 a year ago.
Datadog debuted new cloud and application security features in June 2024, covering production and development settings. This improvement seeks to provide complete security monitoring and control.
Datadog developed the Live Debugger using real-time production data to simplify issue fixing and troubleshooting. A unified OpenTelemetry collector and agent interface is another important upgrade that streamlines data collection and handling observability.
In addition, Datadog won Appdev’s and Marketplace’s Google Cloud Technology Partner of the Year honors. With over 35 integrations with Google Cloud, Datadog can better handle services like Google Vertex AI, Security Command Center and Google Cloud SQL.
Alibaba (BABA)
Alibaba (NYSE:BABA), despite its reputation as the Amazon of China, is up just 5% in the year thus far, as the markets reflect the regulatory and competitive challenges BABA is facing. In addition, the growing US-China trade tensions are also dampening interest in Chinese stocks, but ignoring BABA is folly, especially when considering its potential upside of 32%.
Reaching RMB 25.60 billion, Alibaba Group’s Cloud Intelligence Group noted a 3% quarterly sales rise. Public cloud services and income connected to artificial intelligence drove the expansion. Furthermore, over 90,000 companies have embraced Alibaba Cloud’s proprietary large language model, attesting to the division’s explosive expansion.
With discounts of up to 59% for overseas clients, Alibaba Cloud also revealed a significant price drop for its main public cloud offerings.
Meanwhile, Alibaba opened its first Product Innovation Center and Partner Management Center outside China. This center in Singapore aims to improve customer service and help the world’s digital change by creating solutions tailored to each market and keeping an eye on product updates.
At the Paris 2024 Olympics, Alibaba Cloud and OBS will use AI-enhanced multi-camera replay technology. First demonstrated during the Olympic Qualifier Series in Shanghai, this technology employs machine learning and deep neural networks to rebuild competitive scenes in great detail, making viewing more immersive and putting more eyeballs on Alibaba’s cloud product.
On the date of publication, Faizan Farooque 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.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
