As digital transformation continues to reshape industries, cloud services have become a crucial component for businesses seeking scalability and security. The cloud computing market is experiencing rapid growth, driven by the increasing demand for remote work solutions, digital innovation, and fierce competition among cloud providers.
These emerging prospects presents significant investment opportunities, particularly in key players like Amazon.com, Inc. (AMZN), ServiceNow (NOW), and Autodesk (ASDK). These companies boast robust growth metrics and are well-positioned to capitalize on the evolving digital landscape, with cloud technologies driving advancements in industries like e-commerce, healthcare, and finance.
The global public cloud market is experiencing steady growth, driven by rising demand for digital solutions, cloud service benefits, and the convenience of online offerings. This growth is supported by sub-markets like Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), as well as technological advancements, cost-effectiveness, and scalability.
In addition, customer demand has surged due to the shift toward remote work and digital operations, requiring secure, flexible solutions for collaboration and data storage. Additionally, the rise of IoT devices and edge computing has increased the need for reliable, scalable cloud infrastructure.
Revenue in the public cloud market is projected to reach $773.30 billion this year and is further expected to boom at an anticipated CAGR of 18.5%, surpassing $1.8 trillion by 2029. As trends such as edge computing, quantum computing, and AI-powered cloud development reshape the future, the cloud computing industry offers promising prospects for investors looking to tap into the next wave of technological evolution.
Given these favorable trends, let's take a closer look at the cloud computing stocks:
Amazon.com, Inc. (AMZN)
AMZN operates globally through its retail, advertising, and subscription services. It operates through three segments: North America, International, and Amazon Web Services (AWS).
AMZN’s revenue has grown at a CAGR of 10.6% over the past three years and its operation income has risen at a CAGR of 28.9% over the same time frame.
On October 16, 2024, AMZN unveiled a new lineup of Kindle devices, including the first-ever color Kindle, a revamped Kindle Scribe, the fastest Kindle Paperwhite, and a new entry-level Kindle in a fresh Matcha color.
On October 24, AMZN’s Amazon Web Services (AWS) and Box, Inc. (BOX) expanded their partnership to enable organizations to build generative AI applications using Box AI and Amazon Bedrock. The integration also included the Box connector for Amazon Q Business, allowing companies to use generative AI to generate content, summarize information, and perform tasks with their private data.
During the fiscal third quarter that ended September 30, 2024, AMZN’s total net sales increased 11% year-over-year to $158.88 billion. Its operating income grew 55.6% from the year-ago value to $17.41 billion. In addition, the company’s net income and EPS came in at $15.33 billion and $1.43, up 55.2% and 52.1% over the prior-year quarter, respectively.
Analysts expect AMZN’s EPS and revenue for the fourth quarter ending December, 2024, to increase 47.2% and 10.2% year-over-year to $1.47 and $187.24 billion, respectively. It surpassed the Street EPS and revenue estimates in three of the trailing four quarters, which is promising.
Over the past year, the stock has gained 39.3% to close the last trading session at $205.74. It soared 35.4% year-to-date.
AMZN’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.
AMZN has an A grade in Sentiment and a B in Growth, Momentum, and Quality. It is ranked #14 out of 52 stocks in the A-rated Internet industry.
Beyond what we have stated above, we also have given AMZN grades for Value and Stability. Get all the AMZN’s ratings here.
ServiceNow, Inc. (NOW)
NOW provides the Now Platform for digital transformation, offering workflow automation, AI, IT service management, and risk management solutions. It serves industries like government, finance, healthcare, IT, and telecom worldwide.
NOW’s revenue has grown at a CAGR of 23.7% over the past three years and its operation income has risen at a CAGR of 73.8% over the same time frame.
On November 19, 2024, NOW announced an expanded strategic alliance with Microsoft Corporation (MSFT) to modernize front-office business processes using Copilot and agents. This expansion builds on their long-standing partnership, which recently led to the integration of NOW’s Now Assist with Microsoft 365 Copilot.
On November 13, 2024, NOW and Five9, Inc. (FIVN) expanded their partnership to integrate ServiceNow's CSM with Five9's Intelligent CX Platform. This AI-powered solution aimed to streamline customer support, enhance efficiency, and reduce operational costs while improving customer satisfaction.
In the fiscal third quarter ended September 30, 2024, NOW’s non-GAAP total revenues increased 22% year-over-year to $2.79 billion. Its non-GAAP income from operations was $872 million, up 31% from the year-ago value. Moreover, its non-GAAP net income and non-GAAP EPS stood at $775 million and $3.72, respectively.
Street expects NOW’s revenue and EPS for the fourth quarter ending December 30, 2024, to increase 21.5% and 17.5% year-over-year to $2.96 billion and $3.66, respectively. It surpassed the consensus EPS and revenue estimates in all of the trailing four quarters.
The stock climbed 47.4% year-to-date and has returned 55.3% over the past year, to close the last trading session at $1041.40.
NOW’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, Sentiment, and Quality. It is ranked #13 out of 39 stocks in the B-rated Software - Business industry.
To access NOW’s Value, Momentum, and Stability ratings, click here.
Autodesk, Inc. (ASDK)
ADSK provides 3D design, engineering, and entertainment software solutions globally. Its key products include AutoCAD, Revit, Fusion, Inventor, and Maya, catering to industries like construction, manufacturing, and media. Autodesk serves customers through direct sales and a network of resellers and distributors.
ADSK’s revenue has grown at a CAGR of 12.3% over the past three years and its operation income has risen at a CAGR of 25.4% over the same time frame.
On October 15, 2024, ADSK and Esri announced an enhanced strategic alliance, integrating Esri’s geospatial data into Autodesk Forma. This collaboration aims to improve early design and planning stages for architecture, engineering, construction, and operations (AECO) professionals by combining GIS and BIM technologies.
ADSK’s total net revenue increased 11% year-over-year to $1.57 billion in the fiscal third quarter that ended on October 31, 2024. Its non-GAAP income from operations came in at $573 million, up 4.8% year-over-year, while its net income stood at $275 million representing an increase of 14.1% over the prior-year quarter. Its non-GAAP net income per share grew 4.8% from the year-ago value to $2.17.
Street expects ADSK’s revenue for the fiscal fourth quarter (ending January 2025) to increase 11% year-over-year to $1.63 billion. Its EPS for the same quarter is expected to grow 1.9% from the prior year to $2.13. In addition, it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Shares of ADSK have gained 43.7% over the past year and 19.4% year-to-date to close the last trading session at $290.64.
ADSK’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Growth, Sentiment, and Quality. Within the Software- Application industry, it is ranked #20 out of 128.
Click here to see ADSK’s ratings for Value, Momentum, and Stability.
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AMZN shares were unchanged in premarket trading Thursday. Year-to-date, AMZN has gained 35.41%, versus a 27.18% 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.
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