Cloud computing has changed how companies gather data and stay organized in a digital world. Cloud computing is a foundational piece for many stocks and often features exhaustive switching costs. That means high renewal rates and growing annual recurring revenue.

Cloud computing companies have the flexibility to raise their prices from time to time while retaining their customers. Some cloud computing stocks have comfortably outperformed the market, and many of the big tech companies have embraced this technology.

Cloud computing has been a hot sector for several years, and the trend is likely to continue in 2024. These are some of the top cloud computing stocks to consider. 

Adobe (ADBE)

Adobe (NASDAQ:ADBE) got started with desktop printing software and has evolved to offer various software products for creatives and photographers. Photoshop, Illustrator, Acrobat and Premiere Pro are some of the top Adobe products.

The Adobe Creative Cloud combines these products and others to offer an immersive experience for customers. Prices start at $89.99 per month and get higher if you need more storage. The annual plan is a significant discount which entices more customers to select long-term plans.

Monthly subscription plans have translated into recurring revenue and high returns for shareholders. The stock gained 77% in 2023 and is up by 160% over the past five years. Shares currently trade at a 33-forward P/E ratio.

Adobe closed fiscal 2023 with 12% year-over-year revenue growth in the fourth quarter. Net income increased by 26% year-over-year and helped the company achieve a net profit margin just short of 30%. The company is aiming for $21.30 billion to $21.50 billion in revenue for fiscal year 2024. The midpoint represents 10.2% year-over-year revenue growth.

Crowdstrike (CRWD)

Cloud computing helps businesses operate more efficiently and save money. However, every data point is vulnerable to hackers. Cyber-criminals can steal valuable documents and customer information that can hurt trust and lead to financial losses. Investments in the cloud and cybersecurity often go hand in hand.

Many companies invest in cybersecurity software to mitigate these risks and keep vital assets safe. These firms often turn to Crowdstrike (NASDAQ:CRWD) to enhance their digital security. Crowdstrike’s Falcon platform comes with 27 modules that protect workloads across multiple devices.

The company has over $3 billion in annual recurring revenue after seeing a 35% year-over-year growth rate for that metric. The company continues to grow at a robust pace, which features record-breaking profitability, cash flow from operations, and free cash flow. Total revenue increased by 35% year-over-year.

Crowdstrike outperformed the market and was up by 147% in 2023. Shares have gained roughly 300% over the past five years. Crowdstrike is richly valued with a 70-forward P/E ratio, but accelerating net income growth can make the valuation easier to justify in the future. 

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) has exposure to many verticals and is often one of the top competitors in each. Cloud computing is no exception, as over 500,000 companies use Microsoft Azure. That also includes over 95% of the Fortune 500 companies. 

Investors looking for a stock that can consistently beat the market should consider this big tech company. Shares gained 57% in 2023 and are up by 268% over the past five years. 

The company’s artificial intelligence initiatives can lead to more revenue and earnings growth in the future. The company’s Copilot feature is an AI assistant for Microsoft Office applications. This extra resource will keep current subscribers while enticing more consumers and businesses to use the Microsoft products suite.

Microsoft’s recent earnings report highlights a company that is still in growth mode. Revenue was up by 13% year-over-year to start fiscal 2024, while net income jumped by 27% year-over-year. Microsoft is currently valued at a 34-forward P/E ratio. 

Microsoft doesn’t get as much credit for its dividend since the yield is below 1%. However, the company has maintained an annual dividend growth rate above 10% for several years. Patient investors can generate respectable cash flow from this stock if they have a 10 to 20-year time horizon.

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