Cloud computing became an essential part of people’s work as the COVID-19 pandemic raged on last year. As lockdowns forced offices to shut down and shift to a work-from-home scenario, digitization was the only resort to continue operations. Hence, companies and employees had to depend on cloud services and applications to remain connected to their work. Even though the deployment of vaccines has already started in the United States, the demand for cloud computing is set to remain robust as we move beyond the pandemic.
Notably, Gartner predicted in a press release that the worldwide end-user spending on public cloud computing should increase 18.4% in 2021 to a total of $304.9 billion, up from an estimated $257.5 billion in 2020. Sid Nag, the research vice president at Gartner, mentioned in the press release that organizations are accelerating their digital business transformation as the ability “to use on-demand, scalable cloud models to achieve cost efficiency and business continuity is providing the impetus.”
Moreover, Gartner estimated that the shift to cloud will accelerate as a proportion of IT spending after the COVID-19 pandemic. Cloud is estimated to comprise 14.2% of the total global enterprise IT spending market by 2024 compared to 9.1% in 2020. Meanwhile, International Data Corporation (“IDC”) estimated in a report that by the end of 2021, 80% of enterprises would put “a mechanism in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic.”
The pandemic has boosted trends that are set to last even after the pandemic is over. Work from home is one of them. In fact, the IDC report also mentioned that by 2023, “75% of G2000 companies will commit to providing technical parity” to a workforce that will become hybrid in design by choice and not out of circumstance. IDC further stated that the result of this will be a workforce which is more informed, collaborative and productive. Reflective of this, Global Workplace Analytics predicted in a report that by the end of 2021, 25-30% of the workforce is set to work from home for multiple days a week.
5 Top Cloud Computing Stocks to Watch
The shift to digitization is set to remain robust even beyond the pandemic, making companies dependent on cloud-based services to drive that change. Moreover, the shift is likely to be accelerated by the work-form-home trend that is set to stay or evolve into a hybrid model after the pandemic is over. This makes it a good time to watch out for companies focused on cloud computing that can make the most of this trend going forward. We have picked five such stocks that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dropbox, Inc. DBX provides a collaboration platform worldwide. The company’s platform allows individuals, teams and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 8.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 13.6%.
The Trade Desk, Inc. TTD operates a self-service cloud-based platform that allows buyers to create, manage and optimize data-driven digital advertising campaigns in various advertising formats, in the United States and internationally. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 15.8% over the past 60 days. The company’s expected earnings growth rate for the next five years is 25%.
Microsoft Corporation MSFT develops, licenses, and supports software, services, devices and solutions worldwide. The company’s Intelligent Cloud segment licenses SQL and Windows Servers, Visual Studio, System Center, and related CALs; GitHub that provides a collaboration platform and code hosting service for developers; and Azure, a cloud platform. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 5.3% over the past 90 days. The company’s expected earnings growth rate for the current- year is 16.8%.
DocuSign, Inc. DOCU provides cloud-based software in the United States and internationally. The company provides an e-signature solution that enables businesses to digitally prepare, execute and act on agreements. It currently has a Zacks Rank #3. The Zacks Consensus Estimate for its next-year earnings increased 28.2% over the past 60 days. The company’s expected earnings growth rate for next year is 47.3%.
Amazon.com, Inc. AMZN engages in the retail sale of consumer products and subscriptions in the United States and internationally. One segment of the company is Amazon Web Services that provides compute, storage, database and other AWS services. The company also has a strategic relationship with NXP Semiconductors N.V. to deliver a cloud compute solution for vehicles that enable cloud-powered services. It currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-quarter earnings increased 6.1% over the past 90 days. The company’s expected earnings growth rate for the current year is 29.6%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>