Technology is constantly evolving, and each trend has its cycles. Cloud computing gained prominence and popularity at the beginning of the last decade, and this trend reemerged during the Covid-19 pandemic. The moment is approaching when cloud infrastructure stocks will show their multiple growth again.
Reviews by leading investors may mention that further development of artificial intelligence (AI) requires the latest chips. However, these recommendations often overlook the need for adapted high-powered servers that can be provided by cloud market leaders. Further, the infrastructure and relevant data should be kept in reliable and convenient storage. So, cloud solutions come into play, giving individuals, corporations, and government agencies the ability to thrive in the web environment without the hassle of running their servers. Each of the presented stocks has gained 50% or more over the past year and are not ready to rest on its laurels.
Alphabet (GOOG,GOOGL)
In investors’ minds, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is associated primarily with profits from the advertising business.
Google Search ranks first among the company’s successes and accounts for 90% of the market. Search, display, network advertising and YouTube form the basis of the business and provide the company with super-profits. In the first quarter of 2024, Google Search revenue increased by 14.3% year-over-year (YOY), but Alphabet intends to diversify its interests. Google Cloud strengthens the results of the mega-company, as it has added another thousand products and features to the total number. Alphabet is in a state of constant competition with other cloud infrastructure stocks and is improving to withstand the influence of other tech giants.
Alphabet, the third-largest cloud infrastructure platform, is showing positive profitability, encouraging analysts to make optimistic forecasts. The current P/E ratio is close to 28, indicating a low price compared to other tech players. The company’s revenue is projected to grow by 11% CAGR through 2026. At the same time, earnings per share (EPS) is expected to grow by 20% on an average annualized basis.
Amazon (AMZN)
While the general public was looking away at the hype of Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN) has been climbing step by step to the top of the tech world. The $2 trillion market capitalization is one of its latest achievements, cementing AMZN’s position among the top cloud infrastructure stocks.
After a sharp loss of height in 2022, Amazon has shown that it can draw conclusions and catch up with competitors. It made timely staff changes and cut costs in several areas. In October 2023, the price was close to $120, while in the summer of 2024, it reached $197. Such results seem incredible compared to the starting value of 7 cents in 1997, but the stock is ready to surprise investors in the future.
Unlike new names on the market, Amazon has repeatedly proven its adaptability and capacity to thrive in several areas. It is difficult to imagine the modern market of technological solutions without Amazon Web Services (AWS), which steadily holds its position against the competition from Microsoft Azure and Google Cloud. With annual revenues of more than $100 billion, Amazon can conduct researches and be among the first to implement global cloud solutions.
International Business Machines (IBM)
Late 2023 and early 2024 allowed the investment community to see a balanced and innovative company growing. IBM (NYSE:IBM) made a jump in the price per share from $138 to $197, proving the feasibility of diversifying its interests.
The company is generally pursuing a well-thought-out strategy, but several key initiatives have brought it to the top of the tech world’s Olympus. The acquisition of Red Hat for $34 billion in 2019 triggered the growth of the company’s hybrid cloud computing capabilities.
IBM recognized the potential of artificial intelligence in time and launched the WatsonX platform. It has become the home of new AI-based solutions and has satisfied a large share of the demand for AI services. With a strong cloud portfolio and backing from tech-focused investors, IBM has set its sights on the field of quantum computing. In collaboration with Fundación Ikerbasque, the company has entered the forefront of computer science, preparing the ground for unique offerings. Analysts’ estimates elevate IBM among cloud infrastructure stocks. Despite the current price of about $175.10, Goldman Sachs initiated coverage with a buy rating and a $200 price target.
On the date of publication, Julia Magas did not hold (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.
