Cloud software companies continue to dominate the technology sector, driven by the growing need for scalable, secure, and efficient digital solutions. Therefore, you might consider investing in fundamentally strong cloud software stocks: Oracle Corporation (ORCL), Adobe Inc. (ADBE), and Salesforce, Inc. (CRM), which are poised for growth.
Factors like remote work, hybrid workspaces, and digital transformation initiatives are fueling demand for cloud software. Cloud computing has become the backbone of the hybrid workforce to support seamless collaboration, regardless of location, ensuring scalability and cost efficiency.
Cloud software companies are benefiting from subscription-based revenue models, which ensure steady income streams and recurring business growth. The model makes it easier for new clients to commit and is anticipated to become necessary in the coming years.
In the third quarter of 2024, global spending on cloud infrastructure services increased by 21% year-over-year, reaching $82 billion. This shift is trending with the increasing adoption of AI technologies and the rising demand for high-performance computing and storage. Also, more than 90% of companies worldwide already use cloud services, and this number is only projected to grow in time.
According to Statista, the global public cloud market is projected to reach $1.81 trillion by 2029, exhibiting a CAGR of 18.5%. Cloud software stocks are not just about innovation; they also offer robust margins, making them a compelling investment choice.
Given the promising prospects of the Software - Application industry, let’s look at the fundamentals of the above-mentioned stocks, starting with the third stock.
Stock #3: Oracle Corporation (ORCL)
ORCL offers products and services that address enterprise information technology environments worldwide. It provides cloud software applications, cloud-based industry solutions, application licenses, infrastructure technologies, databases, Java, middleware, hardware products, consulting, and customer services.
On October 30, ORCL launched Oracle Analytics Intelligence for Life Sciences, the AI-powered, cloud-scale data, and analytics platform streamlines that will help accelerate insight generation by unifying disparate data sets into a single, intelligent workbench. This launch will help advance insights and therapies quickly and precisely, delivering the tools and intelligence.
In the same month, ORCL’s Health unveiled a new version of its Clinical AI Agent built on the latest generative AI technology, providing a comprehensive set of advanced AI services for medical providers. This technology will help improve patient-provider interactions by combining comprehensive clinical intelligence with a multimodal voice user interface to automate and unify various clinical workflows.
In the fiscal first quarter that ended on August 31, 2024, ORCL’s revenue increased 6.9% year-over-year to $13.31 billion. The company reported non-GAAP income from operations of $5.71 million, indicating a 12.9% increase from the prior-year quarter with a non-GAAP operating margin of 43% (up 200 bps year-over-year).
ORCL’s non-GAAP net income came in at $3.96 million, up 18% year-over-year, while its non-GAAP net income per share grew 16.8% from the year-ago value to $1.39.
Analysts expect ORCL’s revenue for the second quarter ended November 2024 to increase 9.1% year-over-year to $14.12 billion, while its EPS for the same period is expected to grow 10.6% from the prior-year quarter to $1.48. The company surpassed EPS estimates in three of the trailing four quarters, which is promising.
Shares of ORCL have surged 81.8% year-to-date and 71.1% over the past nine months to close the last trading session at $191.69.
ORCL’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ORCL has a B grade for Stability, Sentiment, and Quality. It is ranked #38 out of 127 stocks in the Software - Application industry. Click here to see the additional ratings for ORCL (Growth, Value, and Momentum).
Stock #2: Adobe Inc. (ADBE)
ADBE operates as a global diversified software company, and its products, services, and solutions are used worldwide to imagine, create, manage, deliver, measure, optimize, and engage with content across surfaces and fuel digital experiences. The company operates through three segments: Digital Media; Digital Experience; and Publishing and Advertising.
On December 3, ADBE and Amazon Web Services (AWS) extended their partnership to make Adobe Experience Platform (AEP) available on AWS. This will enable brands real-time customer experiences and greater flexibility and personalization at scale with AEP-driven insights and workflows.
On October 14, ADBE launched GenStudio for Performance marketing, a new generative AI-first application that empowers brands and agencies to accelerate the delivery of global advertising and marketing campaigns. This launch allows brands to create paid social ads, display ads, banners, marketing emails, and more on a single, self-service application.
During the third quarter, that ended on August 30, ADBE’s total revenues stood at $5.41 billion, up 10.6% year-over-year. Its gross profit stood at $4.85 billion, indicating a 12.6% growth from the prior-year quarter period.
The company reported operating income of $1.99 billion, indicating a 17.4% growth from the prior-year quarter. Its non-GAAP net income stood at $2.08 billion, up 10.8% year-over-year, while its non-GAAP earnings per share rose 13.7% from the prior year’s quarter to $4.65.
The consensus revenue estimate of $5.54 billion for the fiscal fourth quarter (ended November 2024) represents a 9.8% increase year-over-year. The consensus EPS estimate of $4.67 for the current quarter indicates a 9.4% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 20.7% over the past six months to close the last trading session at $552.96.
ADBE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Quality and a B for Sentiment. Within the same industry, it is ranked #22. Click here to see ADBE’s ratings for Growth, Value, Momentum, and Stability.
Stock #1: Salesforce, Inc. (CRM)
CRM provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. It supports third-party development and offers global sales, service, and subscription services, enabling data storage, lead tracking, and issue resolution.
On November 20, CRM introduced Agentforce Testing Center, which enables teams to test the new Agentforce using synthetically generated data with complete monitoring of usage and feedback. This will enable teams to test, deploy, and monitor AI agents with Agentforce at scale, creating a limitless workforce.
On September 17, CRM announced a strategic collaboration with NVIDIA Corporation (NVDA) to develop and co-innovate advanced AI capabilities and interactive avatar experiences within their platforms, CRM’s Agentforce and NVDA’s AI platform. This collaboration will enable new insights and improved productivity across the sales, service, marketing, and IT teams.
For the third quarter of 2025, which ended on October 31, 2024, CRM’s total revenue increased 8.3% year-over-year to $9.44 billion. The company reported non-GAAP income from operations of $3.12 billion, indicating a 14.9% growth from the prior year quarter with a non-GAAP operating margin of 33.1% (up 190 bps year-over-year).
In addition, its free cash flow increased 30.2% year-over-year to $1.78 billion. CRM’s net income came in at $1.53 million, up 24.8% year-over-year, while its non-GAAP net income per share grew 14.2% from the year-ago value to $2.41.
Street expects CRM’s revenue for the fiscal fourth quarter (ending January 2024) to increase 8.1% year-over-year to $10.04 billion. Moreover, its EPS estimate of $2.61 for the same period indicates a 14.2% year-over-year growth. In addition, it surpassed the consensus revenue and EPS estimates in three of the trailing four quarters, which is promising.
CRM shares have gained 49.1% over the past six months and 48.4% over the past three months to close the last trading session at $361.99.
It’s no surprise that CRM has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Quality. Out of 127 stocks in the Software - Application industry, CRM is ranked #20.
Beyond what is stated above, we’ve also rated CRM for Growth, Value, Momentum, Stability, and Sentiment. Get all CRM ratings here.
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ORCL shares were trading at $192.65 per share on Monday morning, up $0.96 (+0.50%). Year-to-date, ORCL has gained 84.96%, versus a 29.00% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
