Cloud computing is the delivery of computing services such as servers, data storage, networking, software, and analytics over the Internet or “cloud.” Its advantages include faster speeds and more flexible resources. It also enables companies to achieve economies of scale with their computing services. Given its advantages, it should not be surprising to learn that cloud computing is growing exponentially.
The global market for cloud computing could grow from $720.99 billion in 2023 to $2.22 trillion by 2031. This represents a compound annual growth rate (CAGR) of 15%. In one way or another, almost all of the mega-cap technology stocks are cloud computing stocks. And the growth of artificial intelligence (AI) is helping to fuel the sector’s growth.
Here are three cloud computing stocks that could grow your wealth.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) could boost its role in cloud computing through a potential $23 billion acquisition of privately held cybersecurity firm Wiz. Wiz provides cybersecurity specifically for cloud-computing platforms and services. If successfully completed, the acquisition of Wiz would be Alphabet’s biggest deal ever and help advance its cloud computing offerings.
Since the division turned profitable about a year ago, Google Cloud has been a bright spot for Alphabet. In this year’s first quarter, Google Cloud posted revenue of $9.57 billion, beating Wall Street estimates of $9.35 billion. The operating income in Google’s cloud business more than quadrupled to $900 million in Q1, demonstrating that the company is generating substantial profits in that business segment.
GOOGL stock has risen 50% in the last 12 months, including a 35% gain so far in 2024.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) makes the servers that enable other companies to build cloud computing infrastructure. Demand for its servers among cloud computing firms has helped to propel Super Micro Computer’s sales and stock to new heights. Not only is SMCI stock the best performer in the S&P 500 index this year, but it has just been announced that the stock is being added to the Nasdaq 100 index.
Super Micro Computer stock will officially be added to the Nasdaq 100 before trading on July 22, replacing Walgreens Boots Alliance (NASDAQ:WBA). The change reflects both the rise of Super Micro Computer’s stock and the sharp decline in Walgreens’ market value. Super Micro’s inclusion in the Nasdaq 100 should boost its stock. This is because mutual funds and exchange-traded funds that track the index will buy the shares.
SMCI stock has more than tripled year to date, giving the company a market capitalization of $53 billion. Earlier this year, the stock was added to the S&P 500 index, which it now sits atop based on its performance.
Salesforce (CRM)
For a cloud computing stock that’s on sale, look to Salesforce (NYSE:CRM). The company’s share price is completely flat on the year (down 0.23%) following a poor earnings report for this year’s first quarter. However, CRM stock is starting to show signs of a rebound as we enter the year’s second half, with its stock having risen 11% in the past month. That’s helped erase much of the loss right after the Q1 print.
While the Q1 readout was bad, with Salesforce missing its quarterly revenue target for the first time since 2006, the company appears to be bouncing back. In June, Salesforce, the world’s biggest cloud computing firm, announced that it is opening a new AI center. The company said it plans to eventually create 500,000 AI-related jobs in the U.K. region.
On the date of publication, Joel Baglole held a long position in GOOGL. 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.
