5 Cloud Computing Stocks to Watch As AI Arms Race Is Underway

In this article, we will be taking a look at 5 cloud computing stocks to watch as the AI arms race is underway. To read our detailed analysis of the latest developments in this space, you can go directly to see the 10 Cloud Computing Stocks to Watch As AI Arms Race Is Underway.

5. Workday, Inc. (NYSE:WDAY)

Number of Hedge Fund Holders: 86

Upside Potential: 8.83%

Analyst Price Target: $240.48

Rishi Jaluria at RBC Capital initiated coverage of Workday, Inc. (NYSE:WDAY) shares on June 28 with an Outperform rating and a $275 price target.

Workday, Inc. (NYSE:WDAY) is an application software company providing enterprise cloud applications globally.

There were 86 hedge funds long Workday, Inc. (NYSE:WDAY) in the first quarter, with a total stake value of $5.02 billion.

4. International Business Machines Corporation (NYSE:IBM)

Number of Hedge Fund Holders: 49

Upside Potential: 9.41%

Analyst Price Target: $146.56

In total, 49 hedge funds were long International Business Machines Corporation (NYSE:IBM) in the first quarter. Their total stake value was $1.5 billion.

Credit Suisse’s Shannon Cross holds an Outperform rating on International Business Machines Corporation (NYSE:IBM) shares as of June 26, alongside a $162 price target.

International Business Machines Corporation (NYSE:IBM) contributes to the cloud computing industry with its open and secure public cloud for business with a next-generation hybrid cloud platform, advanced AI capabilities, and more.

3. salesforce.com, inc. (NYSE:CRM)

Number of Hedge Fund Holders: 136

Upside Potential: 12.61%

Analyst Price Target: $239.10

Based in San Francisco, California, salesforce.com, inc. (NYSE:CRM) is an application software company. It is a leading cloud computing provider, offering businesses a variety of applications like CRM, business analytics, and more.

We saw salesforce.com, inc. (NYSE:CRM) in the portfolios of 136 hedge funds during the first quarter, with a total stake value of $9.1 billion.

An Overweight rating alongside a $248 price target were maintained on salesforce.com, inc. (NYSE:CRM) shares on June 13 by Piper Sandler’s Brent Bracelin.

The Ithaka Group made the following comment about salesforce.com, inc. (NYSE:CRM) in its first-quarter 2023 investor letter:

“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects: (1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s strong relative performance followed a strong F4Q23 earnings release that easily beat Street expectations on the top- and bottom-lines. In addition to the beat, management announced a number of initiatives that activist investors have been clamoring for, specifically a halt to large M&A transactions and a focus on operating profitability.”

2. Paycom Software, Inc. (NYSE:PAYC)

Number of Hedge Fund Holders: 48

Upside Potential: 15.33%

Analyst Price Target: $368.42

Paycom Software, Inc. (NYSE:PAYC) is a company providing cloud-based human capital management solutions delivered as software-as-a-service for businesses in the US.

As of June 28, William Blair’s Matthew Pfau holds an Outperform rating on Paycom Software, Inc. (NYSE:PAYC) shares.

There were 48 hedge funds long Paycom Software, Inc. (NYSE:PAYC) in the first quarter, with a total stake value of $1.2 billion.

In its fourth-quarter 2022 investor letter, Polen Capital said the following about Paycom Software, Inc. (NYSE:PAYC):

“Paycom Software, Inc. (NYSE:PAYC), a high quality, high-growth leader in human capital management and payroll software, was the largest single detractor from returns over the quarter, reversing some of the gains it made in Q3. The company posted strong third-quarter results, with revenue and earnings ahead of expectations. However, concerns over a Global recession and a weaker US employment market weighed heavily on the share price. The company continues to take market share from long-standing incumbents. We believe the business has a long runway with only approximately 5% market share and a growing total addressable market.”

1. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 128

Upside Potential: 68.43%

Analyst Price Target: $141.73

At the end of the first quarter, 128 hedge funds were long Alibaba Group Holding Limited (NYSE:BABA). Their total stake value in the company was $5.9 billion.

Alibaba Group Holding Limited (NYSE:BABA) is a leading e-commerce company that also provides cloud computing services. In 2021, the company’s Alibaba Cloud was the third-largest infrastructure-as-a-service public cloud provider.

Fawne Jiang at Benchmark holds a Buy rating on Alibaba Group Holding Limited (NYSE:BABA) shares as of June 21, alongside a price target of $180.

Here’s what Baron Funds said about Alibaba Group Holding Limited (NYSE:BABA) in its first-quarter 2023 investor letter:

“Alibaba Group Holding Limited (NYSE:BABA) is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest third-party online payment provider. Shares of Alibaba were up this quarter, given meaningful margin expansion, guidance to stabilize core commerce market share in China, and an announced plan to split the company into six units which could further unlock value. We retain conviction that Alibaba is well positioned to benefit from China’s reopening and the ongoing growth in online commerce and cloud in China.”

See also 10 Stocks Jumping On The Generative AI Wagon and 10 AI Stocks Billionaires are Loading Up On.