Cloud Wave is Coming | Analyzing How Mainstream Tech Stocks Are Capitalizing on Cloud Computing Concepts

The Explosion of the Cloud Computing Industry: Why Is It Worth Paying Attention?

In recent years, corporate digital transformation has accelerated, and cloud computing has evolved from a technical concept into an indispensable business infrastructure. In simple terms, cloud computing provides on-demand computing and storage services via the internet, including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).

Why are investors increasingly optimistic about cloud computing concept stocks? There are three core reasons:

Market demand continues to grow explosively. According to Research Nester’s estimates, the global retail cloud market will grow at a compound annual growth rate (CAGR) of over 23% from 2024 to 2036, reaching a revenue scale of $544 billion by 2036. The global cloud computing market size is projected to reach $482 billion in 2023 and surge to $662 billion by 2025, indicating enormous growth potential.

High customer stickiness. Once enterprises establish their operations on the cloud, with increasing data storage needs, the costs and risks of switching providers are very high, providing cloud computing companies with a stable long-term revenue base.

Relatively stable competitive landscape. Due to high industry barriers and significant economies of scale, the market is dominated by a few large companies, avoiding disorderly competition and ensuring sustainability.

Global Cloud Market Map: In-Depth Analysis of 6 Leading Stocks

Based on Q2 2023 data, the global cloud computing market is monopolized by a few giants. Here are the mainstream stocks worth watching:

Market Leader: Amazon (AMZN)

Amazon Web Services (AWS) under Amazon controls over 30% of the global cloud market share, far ahead of competitors. AWS offers a comprehensive cloud ecosystem covering computing, storage, databases, analytics, machine learning, IoT, and more, serving clients including Netflix and other global giants.

On the technical side, AMZN’s weekly chart shows a MACD golden cross signal, indicating strong upward momentum. As the absolute leader in cloud concept stocks, both its fundamentals and technicals support a medium-term bullish outlook.

Enterprise Application King: Microsoft (MSFT)

Microsoft Azure holds about 22% of the global market share, ranking second, with a strong advantage in enterprise applications. Microsoft 365, Dynamics 365, and other suites are deeply integrated with global corporate clients, including Walmart, Delta Airlines, and Taikang Insurance.

From a technical perspective, Microsoft’s weekly chart shows multiple moving averages trending upward, with MACD having formed a golden cross and maintained for a longer period, indicating a strong upward trend. Recently, the stock has found support above $360, with room for further upside.

AI and Data Analytics Pioneer: Google (GOOG)

Alphabet Cloud Platform (GCP) under Google accounts for about 11% of the global market share, ranking third. GCP leads in AI and machine learning, with core products like TensorFlow and BigQuery widely adopted by companies such as IBM, SAP, and Adobe, giving it a clear technological edge.

In terms of stock price, Google is currently consolidating at high levels, with an expected short-term trading range between $120 and $140. Investors may consider trading within this range.

China Cloud Leader: Alibaba (BABA/9988.HK)

Alibaba Cloud holds about 20% of the Chinese market and roughly 4% globally, making it China’s largest cloud service provider. As Chinese enterprises accelerate digitalization, its growth potential should not be underestimated.

However, it is important to note that Alibaba’s recent technical performance appears weak, with the weekly chart showing a MACD death cross, indicating short-term downward pressure. Investors are advised to wait until technical indicators turn stronger and the stock reclaims support above $120 before considering positions.

Veteran IT Service Provider’s Transition: IBM (IBM)

International Business Machines (IBM) offers integrated IT solutions and cloud services, ranking fifth globally with about 3% market share.

The technical outlook is promising: IBM has successfully broken through the long-term resistance at $150, with the weekly MACD forming a golden cross, confirming a mid-term upward trend. This may signal a new upward cycle for this veteran IT giant.

CRM Field Leader: Salesforce (CRM)

Salesforce is renowned for customer relationship management and marketing automation, with its Service Cloud and Marketing Cloud ranking as the sixth-largest cloud computing services globally, with about 2% market share. The company is strengthening its big data analytics capabilities, with substantial growth potential.

On the technical side, the weekly MACD has formed a golden cross. After two quarters of consolidation, recent momentum has broken through the $240 resistance, with the potential to challenge the $300 psychological level within the next six months.

Investment Performance of Cloud Concept Stocks

Data speaks volumes. The First Trust Cloud Computing ETF (SKYY), holding 65 related concept stocks, has since July 2011 achieved a cumulative increase of 342.9%, far surpassing the S&P 500’s 253.4% during the same period. Looking at the performance from the start of this year to now, the returns are 45.1% and 19.4%, respectively. This clearly demonstrates the excess return advantage of cloud concept stocks.

How to Participate in Cloud Computing Concept Stock Investment

Investors can participate through various channels:

Direct stock purchase: High control but concentrated risk, suitable for investors with stock-picking skills.

Stock mutual funds: Managed portfolios selected by fund managers, diversifying risk and balancing returns, but with higher transaction costs.

ETFs: Passively track indices, with low transaction costs and management fees, easy to operate but with risks of premiums and discounts.

Contracts for Difference (CFDs): Leverage trading allows small capital to participate in market fluctuations. CFDs offer low trading costs, leverage support, and 24-hour trading, but high leverage entails high risk. Beginners should use cautiously.

Summary Table of Cloud Computing Concept Stocks

Taiwanese stocks related to cloud computing, such as Compal (2324), Delta Electronics (2308), and Advantech (2395), are also worth关注, as these companies play important roles in supply chains or ecosystems.

Final Investment Advice

The cloud computing industry remains in a high-growth phase, continuing to benefit from the corporate digitalization wave over the next decade. Cloud computing concept stocks are supported by strong fundamentals, favorable technicals, and relatively reasonable valuations.

Investors should conduct thorough research before investing, paying attention to market competition, technological development trends, and individual company performance. It is recommended to start with leading companies like AWS, Azure, and GCP, then choose suitable investment tools based on risk tolerance. Whether holding stocks long-term, allocating funds, or engaging in short-term trading, the cloud computing sector deserves a place in your investment portfolio.