In this article, we are going to list the 5 best cloud computing stocks to invest in. To read our detailed analysis of the cloud computing trends and outlook in 2021, please go to the 14 Best Cloud Computing Stocks to Invest In.
5. Netflix, Inc. (NASDAQ:NFLX)
No of HFs: 116
Total Value of HF holdings: $15.6 Billion
Video streaming Netflix, Inc ranks 5th in our list of the 14 best cloud computing stocks to invest in. NFLX is engaged in streaming entertainment services that started with DVD and Blu-Ray rental services and later dropped the discs for online streaming. During the coronavirus pandemic, the company raised its user database to 200 million, up 25% from 2019. The US makes up the largest of its global subscribers database, with over 73 million users.
The company’s total net income in 2020 came in at $2.76 billion, with the company’s annual revenue of $25 billion. Shares of NFLX jumped 49% over the last twelve months. In March 2021, Analyst Piper Sandler reiterated the stock to Overweight, resulting in an increase of 1.8% in NFLX.
Miller Value Partners mentioned the stock in its Q4 2020 investor letter:
“Lastly, we added a small position to Netflix after the disappointment following 3Q results. Overall, it’s getting more difficult to find investment opportunities in the very high growth areas that meet our standards for attractive value. On the other hand, we continue to find opportunities in more value-oriented areas of the market. We would expect the portfolio to migrate in this direction.”
4. Alibaba Group Holding Limited (NYSE: BABA)
No of HFs: 156
Total Value of HF Holdings: $17.8 Billion
Ranking 4th on the list of 14 best cloud computing stocks to invest in is Alibaba Group. Founded in 1999 by Jack Ma, the cloud computing company operates the most prominent e-commerce market in China. In the fourth quarter of 2020, the company increased its active users to 779 million, up 2% from 757 million in the third quarter. The cloud computing giant was recently fined $2.8 billion by China after the firm reportedly violated China’s anti-monopoly law. However, the penalty was not likely to damage the growth of Alibaba, with records of solid gains in 2020.
The company’s revenue in 2020 came in at $72 billion. The stock gained 13% over the last twelve months. Citigroup keeps its Buy rating on Alibaba Group Holdings and raises its price target to $345 per share.
Davis Funds mentioned that BABA will maintain its leading position in the e-commerce sector in its Q4 2020 investor letter:
“The current focus of the Chinese government is on e-commerce and consumer finance, impacting companies such as e-commerce leader Alibaba, resulting in the delay of the ANT Group IPO. Our expectation is that while a company like Alibaba will have to eliminate business practices such as exclusive supplier arrangements, it will maintain its leading position in the thriving Chinese e-commerce sector due to its brand, scale, network effects and ability to innovate.”
3. Alphabet, Inc. (NASDAQ: GOOGL)
No of HFs: 179
Total Value of HF Holdings: $21.9 Billion
Securing the 3rd spot on the 14 best cloud computing stocks list to invest in is Alphabet Inc. The tech giant operates the cloud computing software, Google Cloud Platform (GCP), which has over 4 million paying customers. In 2020, with $13 billion in sales, the GCP accounted for 7.2 percent of Google’s overall revenue. Google Cloud recently collaborated with Varian, a radiation oncology treatments and software company, to develop an artificial intelligence (AI) based platform to help in the battle against cancer.
The company’s total revenue in 2020 came in at $182 billion. The stock jumped 87.6% over the last twelve months. An insider recently purchased 2 shares worth $2,253 in April 7. The stock is 0.7% since then. Analyst Argus Research Company gave Alphabet a Buy ranking with a target price of $2,500 and an upside potential of 10.10%.
Weitz Investment Management mentioned that GOOGL was the most significant contributor for the fund in its Q4 2020 investor letter:
“Despite mounting regulatory scrutiny, Alphabet was the Fund’s largest contributor for the year. The stock rose materially as Google’s digital advertising businesses continued to chug along.”
2. Microsoft Corporation (NASDAQ: MSFT)
No of HFs: 258
Total Value of HF Holdings: $52.8 Billion
Tech giant Microsoft Corp ranks 2nd in our list of 14 best cloud computing stocks to invest in. The company’s cloud platform, Microsoft Azure, focuses on analytics, virtual computing, storage, networking, among others. The cloud has over 715 million users, including Verizon (VZ), LG Electronics, and LinkedIn Corp. During the pandemic, the revenue of Azure was $14.6 billion, up 23%. Nokia recently entered a partnership with Microsoft to leverage its Cloud RAN and enhance 5G deployments.
The company’s overall revenue in the fiscal year 2020 was $143 billion. Shares of MSFT gained 54% over the last twelve months. Morgan Stanley analysts reiterated their Overweight rating on Microsoft (MSFT), increasing their price target to $245 (from $230) and predicting another dividend raise.
Betton Fund mentioned that most of the growth from MSFT is from the continued shift of corporate computing systems to “the cloud” in its Q4 2020 investor letter:
“Microsoft’s stock also had a great year, returning 42.4% on increased earnings per share of 30%. The main driver of their growth in recent years is their cloud computing business, and while it did see a bump in demand as office workers went remote, most of the growth is from the continued shift of corporate computing systems to “the cloud.” We think this shift is still in its early stages.”
1. Amazon.Com Inc. (NASDAQ: AMZN)
No of HFs: 273
Total Value of HF Holdings: $5.15 Billion
Topping the list of 14 best cloud computing stocks to invest in is Amazon. The online retail shopping giant operates the cloud platform Amazon Web Services (AWS), which caters to worldwide users who require a venue for database storage, content delivery, and functions that encourage businesses to scale and grow. The company benefited during the coronavirus pandemic and enforced lockdowns. In 2020, Amazon reported their active users surpassed one million. The company also reported a fourth-quarter AWS revenue of $12.7 billion, up 28% from 2019. With the rising number of network and troubleshoot boot issues, AWS recently established EC2 Serial Console to aid with the serial connection to Amazon Elastic Compute Cloud (EC2) instances.
Amazon’s total revenue in the fourth quarter of 2020 was $125.56 billion. Citigroup Corp. analysts gave Amazon a Buy recommendation with a target price of $ 3,750.00 and an 11.20% upside opportunity.
Saturna Capital Corporation mentioned that MSFT was the leading contributor to Fund returns in its Q4 2020 investor letter:
“Technology claimed six of the 10 Largest Contributors for 2020, demonstrating the effect of the pandemic, remote work, and the acceleration of various Technology and Consumer trends. Indeed, a more expansive definition of Technology might include Consumer stock Amazon. Regardless of classification, Amazon was the leading contributor to Fund returns based not only on its dominant e-commerce position but also its leading cloud business, Amazon Web Services.”
You can also take a peek at Tiger Cub Billionaire Stephen Mandel’s Top 10 Stock Picks and David Einhorn’s Top 10 Stock Picks.
