In this article, we discuss 5 best cloud stocks to buy now. If you want to see more stocks in this selection, check out 11 Best Cloud Stocks To Buy Now.
5. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 71
Workday, Inc. (NASDAQ:WDAY) is a California-based company that provides enterprise cloud applications in the United States and internationally. On August 26, the company posted Q2 results that analysts described as “strong”, while also reaffirming its guidance for the rest of the fiscal year, despite concerns of a slowdown in the cloud sector. Workday, Inc. (NASDAQ:WDAY) is one of the best cloud stocks to buy now.
On September 14, Canaccord analyst David Hynes noted that Workday, Inc. (NASDAQ:WDAY) hosted its annual Investor Day, which reinforced his conviction in the view that most of HCM and Financial systems will ultimately move to the cloud, and Workday, Inc. (NASDAQ:WDAY) is a prominent category leader among mid-market and large buyers when it comes to the ability to execute. The analyst reiterated his Buy rating and a $200 price target on Workday, Inc. (NASDAQ:WDAY) shares.
According to Insider Monkey’s data, 71 hedge funds were bullish on Workday, Inc. (NASDAQ:WDAY) at the end of June 2022, compared to 87 funds in the previous quarter. Stephen Mandel’s Lone Pine Capital is the leading position holder in the company, with 5 million shares valued at $700.5 million.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Workday, Inc. (NYSE:WDAY) in its Q4 2021 investor letter:
“We believe the weakness created an opportunity for us to add to an exceptionally high-quality payments franchise with an attractive growth and free cash flow profile and little credit or interest rate exposure. It also supported our efforts to maintain diversified IT exposure in a narrowing market; additions to our software-as-aservice (SaaS) holding Workday during the quarter also bolstered this diversification, in which we seek to balance exposure to more widely owned mega cap names…”
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a Texas-based provider of cloud-based cybersecurity protection across endpoints and cloud workloads, identity, and data. The company announced on September 20 that it is acquiring IT services firm Reposify. Reposify’s external attack surface management (EASM) capabilities will help expand CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s Threat Intelligence and Security and IT Operations product suites.
On September 21, BTIG analyst Gray Powell kept a Buy rating and a $234 price target on CrowdStrike Holdings, Inc. (NASDAQ:CRWD). The analyst said that discussions with the company management have left him with a higher confidence in CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s growth potential and its ability to combat higher pressure on IT budget in a weakening economy.
Among the hedge funds tracked by Insider Monkey, 77 funds reported owning stakes in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) at the end of Q2 2022, compared to 80 funds in the earlier quarter. Chase Coleman’s Tiger Global Management is the largest stakeholder of the company, with 6.5 million shares worth $1.10 billion.
Here is what Carillon Tower Advisers specifically said about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2022 investor letter:
“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a security software platform for protecting information technology assets and cloud workloads, delivered strong earnings results, with solid recurring revenue, customer growth, and profitability. Some investors, however, hoped for bigger numbers on the annual recurring revenue metric. Additionally, CrowdStrike has shown a desire to continue to hire to fuel growth, and so the expected increase in future profitability will be held back somewhat in the near term. We remain positive on the company’s prospects, as current geopolitical tensions make cyber security mission-critical.”
3. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 81
Datadog, Inc. (NASDAQ:DDOG) is a New York-based company that provides a monitoring and analytics platform for cloud developers and businesses in North America and internationally. In mid-August, Datadog, Inc. (NASDAQ:DDOG) announced that it had enhanced monitoring for Microsoft Azure and SQL database platforms. Datadog Database Monitoring for Microsoft SQL and Azure includes features to observe core query metrics like average latency, total execution time, and number of rows queried to check problematic queries and long-term patterns. Datadog, Inc. (NASDAQ:DDOG) is one of the best cloud stocks to buy now.
On September 23, Credit Suisse analyst Fred Lee initiated coverage of Datadog, Inc. (NASDAQ:DDOG) with an Outperform rating and a $145 price target. Given the company’s strategic position in infrastructure monitoring and cloud infrastructure, top-notch product development team, and notable expansion into adjacencies, the analyst believes Datadog, Inc. (NASDAQ:DDOG) could provide sustained and high growth versus competitors and Wall Street expectations.
According to Insider Monkey’s data, Datadog, Inc. (NASDAQ:DDOG) was part of 81 hedge fund portfolios at the end of Q2 2022, compared to 82 funds in the last quarter. Henry Ellenbogen’s Durable Capital Partners is the largest stakeholder of the company, with more than 3 million shares worth $299.5 million.
Here is what Baron Global Advantage Fund has to say about Datadog, Inc. (NASDAQ:DDOG) in its Q1 2022 investor letter:
“Another example is Datadog, the leading infrastructure monitoring, application performance monitoring and log management software platform. Datadog’s stock declined 15% during the quarter, despite reporting sparkling operational results, with revenues accelerating to a growth rate of 84% year-over-year with 33% free cash flow margins, while guiding for 2022 significantly above expectations. Datadog added 4,600 new customers in the quarter, while existing customers continued to increase their spending on Datadog products at a rapid pace with the number of customers using four or more products increasing to 33% from 22% last year. While Datadog’s stock was down, its intrinsic value has undoubtedly increased. This is enabled by rapid innovation (Datadog released 13 new products in 2021) into a market that is benefiting from the secular growth in cloud, digital transformation, and the explosion in complexity as the number of vendors, diversity of technologies and related infrastructure continued to expand.”
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA), the Chinese technology conglomerate, is one of the biggest players in cloud computing. Alibaba Cloud offers cloud computing services to online businesses and Alibaba’s own e-commerce universe. On September 23, the company said it would invest up to $1 billion over the next three years “for a global partner ecosystem upgrade” and support its cloud computing customers in an effort to elevate growth.
On August 8, Deutsche Bank analyst Leo Chiang raised the price target on Alibaba Group Holding Limited (NYSE:BABA) to $160 from $155 and maintained a Buy rating on the shares. The company’s second quarter net income and adjusted net margins exceeded consensus, mainly given a quicker than expected narrowing of losses in new initiatives, the analyst told investors in a research note. The analyst sees the current valuation as “defensive”, and noted a faster than anticipated macro recovery could deliver upside potential.
According to Insider Monkey’s Q2 data, Alibaba Group Holding Limited (NYSE:BABA) was part of 106 hedge fund portfolios, up from 100 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the biggest position holder in the company, with 14.5 million shares worth $1.6 billion.
Ensemble Capital recently published its Q2 2022 investor letter. Here is what the fund specifically said about ServiceNow, Inc. (NYSE:NOW):
“ServiceNow is an enterprise software company that helps their corporate customers integrate all of their various software products into a unified platform. Their products are a key element of driving the digital transformation nearly every large company is undergoing. At the recent JP Morgan investor day, CEO Jamie Dimon explained that while the company could reduce expenses if needed should the economy slow, that their spending on digital transformation would continue as this spending was critical to the company managing costs and maximizing revenue over time. As an example of this type of spending, Dimon specifically pointed to ServiceNow, calling out that the company’s products now oversaw the single largest collection of JP Morgan data and highlighted that working with them had saved JP Morgan $50 million over the past few years.
While we have high expectations for ServiceNow’s long-term growth rate, at the company’s investor day in late May they offered an increased growth outlook for the next five years as they target even higher levels of growth than we have been expecting.”
1. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce, Inc. (NYSE:CRM) is a California-based customer relationship management company that offers six major types of clouds – Sales Cloud, Marketing Cloud, Commerce Cloud, Service Cloud, Experience Cloud, and Analytics Cloud. Salesforce, Inc. (NYSE:CRM) is one of the best cloud stocks to buy now.
On September 22, Jefferies analyst Brent Thill noted that Salesforce, Inc. (NYSE:CRM) delivered the “trinity” of growth, profitability, and capital return at its analyst day. The company guided $50 billion in sales by fiscal 2026, above Wall Street’s $48 billion consensus and representing growth of 17% annually, profitability with more than 25% margins by 2026, and capital return at 30%-40% of free cash flow, the analyst told investors. He finds the stock “valued attractively at trough levels” and maintained a Buy rating on the shares with a $250 price target.
According to Insider Monkey’s data, 116 hedge funds were bullish on Salesforce, Inc. (NYSE:CRM) at the end of the second quarter of 2022, compared to 114 funds in the last quarter. Harris Associates is a significant position holder in the company, with 5 million shares worth $829 million.
Here is what Vulcan Value Partners has to say about Salesforce, Inc. (NYSE:CRM) in its Q1 2022 investor letter:
“Salesforce.com Inc. is the dominant provider of customer relationship management software and technology. Salesforce has high retention rates, pricing power, high free cash flow, and a competitive moat. The company continues to execute well. Margins decreased slightly during the fourth quarter but continue to be on path for material expansion over the long term. Salesforce is seeing increased spending as employees are returning to the office, and we believe the global pandemic has only improved its prospects.”
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