The cloud computing industry has significantly transformed IT services by offering scalable and flexible solutions to businesses. This shift has fostered the growth of the Internet technology services sector, which includes platforms for communication, document management, and remote work. Among the major stocks leading the charge in this industry are Zoom Communications (ZM), DocuSign (DOCU), and Upwork (UPWK).
The rise of remote and hybrid work environments has spotlighted cloud computing as the backbone of modern productivity and collaboration. Emerging trends in this industry include the widespread adoption of hybrid cloud environments, AI-driven services, and advanced collaboration tools. Driving forces behind this growth include the demand for cost-effective, agile solutions that enable businesses to scale and innovate.
The global cloud computing market is expected to grow at a CAGR of 21.2% from 2024 to 2030.
As a result, the global IT services market, valued at $1.4 trillion in 2023, is expected to reach nearly $3 trillion by 2034, growing at a CAGR of 7.1%. This expansion is driven by the broad adoption of cloud computing technologies, highlighting the increasing reliance on cloud-based services to meet the evolving needs of businesses worldwide.
Considering these conducive trends, let’s examine the cloud computing stocks in detail.
Zoom Communications Inc. (ZM)
ZM provides a comprehensive, unified communications platform, offering products such as Zoom Meetings, Zoom Phone, Zoom Rooms, and Zoom Webinars, alongside solutions like the Zoom Developer Platform and Zoom Contact Center. Its services cater to diverse end-users, including individuals and industries like education, healthcare, finance, government, and retail.
On September 18, ZM and Mitel Networks announced a strategic partnership to offer a hybrid cloud solution integrating Zoom Workplace and AI Companion with Mitel’s communication platform. This initiative aims to meet enterprise demand for secure, hybrid unified communications, enhancing productivity while leveraging existing Mitel investments.
On September 24, ZM introduced new add-on products and functionalities to enhance its advanced enterprise offerings. These additions aim to help organizations address critical compliance, security, privacy, survivability, and manageability needs within the Zoom platform.
During the fiscal third quarter that ended October 31, 2024, ZM’s revenue increased 3.6% year-over-year to $1.18 billion. Its non-GAAP income from operations grew 2.4% from the year-ago value to $457.79 million. In addition, the company’s non-GAAP net income and non-GAAP net income per share came in at $435.07 million and $1.38, up 8.4% and 7% over the prior-year quarter, respectively.
Street expects ZM’s revenue for the fiscal year (ending January 31, 2025) to increase 3.2% year-over-year to $4.67 billion. Its EPS for the same year is expected to increase 5.1% year-over-year to $5.47. It surpassed the Street’s EPS estimates in all of the trailing four quarters, which is impressive.
Over the past year, the stock has gained 21.3% to close the last trading session at $83.36. It soared 15.9% year-to-date.
ZM’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ZM has a B grade in Value, Sentiment, and Quality. It is ranked #11 out of 78 stocks in the Technology – Services industry.
Beyond what we have stated above, we also have given ZM grades for Growth, Momentum, and Stability. Get all the ZM’s ratings here.
DocuSign, Inc. (DOCU)
DOCU provides electronic signature solutions and tools like Contract Lifecycle Management, Document Generation, and Gen for Salesforce, catering to businesses, real estate professionals, and government agencies. Its features support identification, notarization, and compliance needs for users across industries, including life sciences and federal institutions.
In the fiscal third quarter ended October 31, 2024, DOCU’s total revenue reached $754.82 million, up 7.8% year-over-year. Its non-GAAP income from operations was $223.08 million, up 19% from the year-ago value. Moreover, its non-GAAP net income and non-GAAP net income per share stood at $ 188.50 million and $ 0.90, respectively, representing increases of 15.1% and 13.9% over the prior-year quarter.
Street expects DOCU’s revenue and EPS for the fourth quarter ending January 31, 2025, to increase 6.2% and 9.9% year-over-year to $756.47 million and $ 0.84, respectively. It surpassed the Street’s revenue and EPS estimates in all of the trailing four quarters.
Over the past year, the stock has gained 81.7% to close the last trading session at $83.68. It soared 40.8% year-to-date.
DOCU’s POWR Ratings reflect strong prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Growth and Value. It is ranked #3 out of 18 stocks in the A-rated Software - SAAS industry.
To access DOCU’s Momentum, Stability, and Sentiment ratings, click here.
Upwork Inc. (UPWK)
UPWK connects businesses with freelancers and agencies worldwide, offering talent across diverse fields like design and software development. Its platform streamlines sourcing, contracting, and collaboration, with services such as Upwork Payroll and Enterprise solutions.
UPWK’s total revenue increased 10.3% year-over-year to $193.78 million in the third quarter that ended on September 30, 2024. Its non-GAAP income from operations came in at $ 39.96 million, up 35.6% year-over-year. Its non-GAAP net income came in at $ 39.16 million, up 35.6% year-over-year, while its non-GAAP EPS grew 38.1% from the year-ago value to $0.29.
Analysts expect UPWK’s EPS and revenue for the year ending December 31, 2024, to increase 95.8% and 10.1% year-over-year to $ 1.02 and $ 758.80 million, respectively. It surpassed the street revenue estimates in each of the trailing four years.
Shares of UPWK have gained 19.3% over the past year and 11.2% year-to-date to close the last trading session at $ 16.54.
UPWK’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Quality. Within the B-rated Internet – Services industry, it is ranked #3 out of 25 stocks.
Click here to see UPWK’s ratings for Momentum, Stability, and Sentiment.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today's volatile markets:
3 Stocks to DOUBLE This Year >
ZM shares were unchanged in premarket trading Friday. Year-to-date, ZM has gained 15.92%, versus a 28.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Cloud Computing Stocks Enabling the Future of Work StockNews.com
