15 Best Cloud Computing Stocks Heading into 2024
In this article, we will be taking a look at the 15 best cloud computing stocks heading into 2024. To skip our detailed analysis of the cloud computing industry, you can go directly to see the 5 Best Cloud Computing Stocks to Buy.
Cloud Computing: An Area In Tech Worth Looking Into
The information technology sector is one that has continued to exceed investor and analyst expectations during 2023. Developments such as the rise of artificial intelligence (AI) and generative AI has primarily spearheaded the tech rally, bringing the stock prices for tech stocks higher than ever before. However, AI isn't the only area of tech that deserves investor attention at this moment. Another exciting field of development and investment is cloud computing, as individuals, corporations, and governments worldwide shift to a more digital future.
According to tech experts and concerned professionals in the cloud computing space, this area of information technology is only just starting to grow. Adam Selipsky, the CEO of Amazon Web Services, joined CNBC in June 2022 to discuss this. Here are some of his comments from back then:
"We've always said that in the fullness of time, it's possible that AWS could become the largest business at Amazon. Now Amazon has other large and great businesses and so it could take a while for us to get there, but I think that possibility is there. Essentially, IT is going to move to the cloud. It's gonna take a while, you've seen maybe only, call it 10% of IT today move to cloud. So it's still day one, it's still early."
Can Cloud Computing Grow To Greater Heights?
Back then, Selipsky was noting that AWS was still in the course of its growth. A Bloomberg article from June 2022 later noted that this business alone was on track to achieve a $3 trillion valuation, which was almost three times its value back then, although it did not mention when this would be achieved. This is just one example of a cloud business that is expected to hit record highs in the near future. As the world is rapidly continuing to move towards the development of digital infrastructure, and as companies are committing themselves to move their information technology operations to the cloud, we can expect to see further growth and expansion in this market.
Considering the above, cloud computing stocks such as Oracle Corporation (NASDAQ:ORCL), ServiceNow, Inc. (NYSE:NOW), and Snowflake Inc. (NYSE:SNOW), are among the top investments in the tech space for many investors and hedge funds alike as they continue to bet on the industry's drastic growth. We have compiled a list of some of the best cloud stocks to buy today so investors have a better idea of which companies are good bets for them as they head into 2024. These include some of the best pure-play cloud stocks out there today alongside others companies with a more diverse set of businesses.
A team of software engineers at desks working on code for a cutting-edge cloud computing solution. Editorial photo for a financial news article. 8k. --ar 16:9
Our Methodology
We used Insider Monkey's hedge fund data from the second quarter to find cloud computing stocks that were popular among hedge funds in that quarter. We then shortlisted and ranked these stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest number.
Best Cloud Computing Stocks Heading into 2024
15. Veeva Systems Inc. (NYSE:VEEV)
Number of Hedge Fund Holders: 46
Veeva Systems Inc. (NYSE:VEEV) is a provider of a cloud-based software for the life sciences industry. The company offers Veeva Commercial Cloud, which is a suite of software and data solutions.
An Outperform rating and a $242 price target were reiterated on shares of Veeva Systems Inc. (NYSE:VEEV) on September 14 by analyst Joe Vruwink at Baird.
There were 46 hedge funds long Veeva Systems Inc. (NYSE:VEEV) in the second quarter, with a total stake value of $910.6 million.
Artisan Partners mentioned Veeva Systems Inc. (NYSE:VEEV) in its second-quarter 2023 investor letter:
“As we have met with companies, we have learned about the many ways AI can be leveraged to enhance business outcomes. That can mean designing AI functionality into a company’s products and services, allowing customers to derive additional value. The rapid emergence of AI-assisted software development tools can speed innovation, allowing companies to produce more, richer apps at lower cost. In addition, companies are deploying AI tools as sales and marketing enablers—helping with both prospect targeting and client service. We believe the companies with modern technology infrastructures, proprietary data sets and adaptive cultures are best positioned to take advantage of these tools.
We are focused on aligning with forward-thinking management teams who are investing to creatively deploy these capabilities. For example, Veeva Systems Inc. (NYSE:VEEV) has the dominant CRM platform for pharmaceutical sales and marketing organizations. The company has massive amounts of data and is utilizing AI within its latest Vault platform to help its customers identify and profile prospects, tailor more personalized interactions and enhance overall customer service.”
Like Oracle Corporation (NASDAQ:ORCL), ServiceNow, Inc. (NYSE:NOW), and Snowflake Inc. (NYSE:SNOW), Veeva Systems Inc. (NYSE:VEEV) is a cloud computing stock many hedge funds are eyeing today.
14. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 49
On August 25, Ryan Koontz at Needham reiterated a Buy rating and a $75 price target on shares of Twilio Inc. (NYSE:TWLO).
Twilio Inc. (NYSE:TWLO) is an internet services and infrastructure company. It operates a cloud communications platform that enables develops to build, scale, and operate customer engagement with software applications.
Twilio Inc. (NYSE:TWLO) was spotted in the 13F holdings of 49 hedge funds in the second quarter. Their total stake value was $2.2 billion.
Here's what Aristotle Atlantic Partners, LLC said about Twilio Inc. (NYSE:TWLO) in its fourth-quarter 2022 investor letter:
“We sold Twilio Inc. (NYSE:TWLO) and thereby reduced our subsector weight in software. The company reported a decent third quarter, but disappointed on fourth quarter 2022, full year 2023, and long-term guidance. The company is seeing macroeconomic headwinds and a slowdown spreading from technology, social media and cryptocurrency to retail and e-commerce. The other negative disclosure and a driver of this gross margin “miss” was that Twilio’s software sales are not accelerating at the rate that we expected. We are disappointed with this lower topline and low operating margin improvement guidance. The business transformation is taking longer than expected, and there is the heightened possibility that the new software growth could be stifled by more formidable competition as Twilio has made too many missteps.”
13. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 51
Citadel Investment Group was the largest shareholder in International Business Machines Corporation (NYSE:IBM) at the end of the second quarter, holding 2.6 million shares.
International Business Machines Corporation (NYSE:IBM) is an IT consulting and other services company. It offers a hybrid cloud platform and software solutions among other products and services.
Amit Daryanani at RBC Capital initiated coverage on shares of International Business Machines Corporation (NYSE:IBM) with an Outperform rating and a $188 price target on September 20.
We saw 51 hedge funds long International Business Machines Corporation (NYSE:IBM) in the second quarter, with a total stake value of $813.9 million.
12. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 55
Our hedge fund data shows 55 hedge funds long Cisco Systems, Inc. (NASDAQ:CSCO) in the second quarter. Their total stake value was $1.5 billion.
Cisco Systems, Inc. (NASDAQ:CSCO) is a communications equipment company. It delivers cloud solutions that help optimize user clouds, applications, and workloads.
On September 22, Ivan Feinseth at Tigress Financial maintained a Buy rating on shares of Cisco Systems, Inc. (NASDAQ:CSCO) while raising the stock's price target from $73 to $76.
This is what ClearBridge Investments said about Cisco Systems, Inc. (NASDAQ:CSCO) in its second-quarter 2023 investor letter:
“Cisco Systems, Inc. (NASDAQ:CSCO), which provides IT and networking services in the form of network security, software development and cloud computing, traded down as enterprise customers showed signs of tightening their IT spending budgets and news of cybersecurity concerns, even while it beat expectations and raised its full-year guidance. Concerns over increased competition and share loss in its core verticals led us to exit our position during the quarter as we made several moves to add to existing higher-conviction holdings or initiate new positions that we find more compelling in the long term.”
11. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 65
Snowflake Inc. (NYSE:SNOW) is the provider of a cloud-based data platform for organizations in the US and abroad. It offers Data Cloud to enable customers to consolidate their data into a single source.
Snowflake Inc. (NYSE:SNOW) was seen in the portfolios of 65 hedge funds in the second quarter, with a total stake value of $5.4 billion.
Stephen Bersey at HSBC initiated coverage on shares of Snowflake Inc. (NYSE:SNOW) with a Buy rating and a $201 price target on September 15.
Holding 15.4 million shares, Altimeter Capital Management was the largest shareholder in Snowflake Inc. (NYSE:SNOW) at the end of the second quarter.
Snowflake Inc. (NYSE:SNOW) was mentioned in ClearBridge Investments' second-quarter 2023 investor letter:
“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology.
Snowflake Inc. (NYSE:SNOW), a cloud-based data platform company, is positioned well to help enterprises better leverage their own data to get the most out of AI models. Though it is still early days in terms of adoption, Snowflake saw workloads for data science, machine learning, and AI use cases grow more than 90% year-over-year in its most recent quarter.”
10. VMware, Inc. (NYSE:VMW)
Number of Hedge Fund Holders: 70
BMO Capital's Keith Bachman maintained a Market Perform rating on shares of VMware, Inc. (NYSE:VMW) on September 1 while raising his price target on the stock from $140 to $160.
A total of 70 hedge funds were long VMware, Inc. (NYSE:VMW) in the second quarter. Their total stake value was $9.01 billion.
VMware, Inc. (NYSE:VMW) is a provider of software solutions in modern applications, cloud management and infrastructure, networking, security, and workspaces. It offers multi-cloud solutions such as the VMware vSphere, among more.
9. Workday, Inc. (NYSE:WDAY)
Number of Hedge Fund Holders: 71
Viking Global was the most prominent shareholder in Workday, Inc. (NYSE:WDAY) at the end of the second quarter, holding 3.03 million shares.
An Outperform rating and a $275 price target were maintained on Workday, Inc. (NYSE:WDAY) shares on September 28 by Rishi Jaluria at RBC Capital.
Workday, Inc. (NYSE:WDAY) is an application software company. It provides enterprise cloud applications in the US and international to help users plan, execute, analyze, and extend to other applications and environments.
Workday, Inc. (NYSE:WDAY) had 71 hedge funds long its stock in the second quarter, with a total stake value of $5.1 billion.
Artisan Partners said this about Workday, Inc. (NYSE:WDAY) in its second-quarter 2023 investor letter:
“We initiated new GardenSM positions in Workday, Inc. (NASDAQ:WDAY), ABB and Microsoft during the quarter. Workday engages in the development of enterprise cloud applications for finance and human capital. Since its launch in 2005, the company has pioneered the shift from on-premises to cloud in the human capital market. It has racked up over 4,000 core customers, commands greater than 50% market share in the human capital market among the Fortune 500 (up from ~40% three years ago and ~15% in 2015) and continues to expand its market share. Our view is that subscription growth can meaningfully outperform current estimates through cross-selling to customers that are looking to consolidate vendors, acquiring customers in emerging areas such as mid-sized and international companies, implementing price increases as renewals come due and increasing adoption of its financial management offering among the Fortune 500 customer base.”
8. Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Holders: 84
In the second quarter, 84 hedge funds were long Oracle Corporation (NASDAQ:ORCL). Their total stake value was $3.4 billion.
As of September 22, Guggenheim's John Difucci holds a Buy rating and a $150 price target on Oracle Corporation (NASDAQ:ORCL) shares.
Oracle Corporation (NASDAQ:ORCL) is a systems software company. Its Oracle cloud software-as-a-service offerings include cloud software applications like Oracle Fusion cloud enterprise resource planning, among more.
ClearBridge Investments mentioned Oracle Corporation (NASDAQ:ORCL) in its second-quarter 2023 investor letter:
“The Strategy outperformed in the quarter, benefiting from recent opportunistic additions such as Meta Platforms as well as medium and long-term holdings such as Vertiv, Oracle Corporation (NYSE:ORCL) and Martin Marietta Materials.
Expectations that rapidly developing generative AI technology will drive another wave of cloud adoption were also a boon for Oracle, the dominant provider of on-premise database software for large enterprises globally, with growing cloud and SaaS businesses. Oracle noted that generative AI cloud customers have already signed contracts to purchase more than $2 billion of cloud capacity, reflecting the strengths of its technology as well as its aggressive go-to-market strategy.”
7. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 93
ServiceNow, Inc. (NYSE:NOW) is another systems software company on our list. It provides enterprise cloud computing solutions that define, structure, consolidate, manage, and automate services for enterprises globally.
In total, 93 hedge funds were long ServiceNow, Inc. (NYSE:NOW) in the second quarter, with a total stake value of $3.9 billion.
GQG Partners was the largest shareholder in ServiceNow, Inc. (NYSE:NOW) at the end of the second quarter, holding 1.5 million shares in the company.
A Market Outperform rating and a $665 price target were reiterated on Oracle Corporation (NASDAQ:ORCL) shares on September 22 by JMP Securities analyst Patrick Walravens.
Here's what Lakehouse Capital said about ServiceNow, Inc. (NYSE:NOW) in its July 2023 investor letter:
“US-based software company ServiceNow, Inc. (NYSE:NOW) delivered another impressive quarterly result that came in ahead of analysts expectations. Subscription revenues grew 25% year-on-year in constant currency terms to $2.1 billion and operating margins came in at 23.4%. Despite ongoing variability in the macro backdrop, ServiceNow continues to benefit from spend prioritisation within the IT tech stack as vendors look to consolidate back-office apps onto an integrated platform. The company’s operational metrics held firm, with remaining performance obligations growing 24% year-on-year to $14.2 billion and renewal rates ticking up to 99%. As we have mentioned before, the company’s renewal rates are noteworthy as not only are they best-in-class but they are also remarkably consistent, typically in the range of 97% to 99%. They speak to the mission critical nature of the platform and are a key driver of long term annuity value.
Investors were also excited to hear management speak to the burgeoning artificial intelligence (AI) opportunity. Things are moving fast and the company plans to release new premium offerings of their workflow products – across IT, customer service and human resources – towards the back end of 2023 that will have new Generative AI capabilities embedded into them. Management also mentioned that they anticipate these new offerings could deliver a “minimum” 60%-plus list price uplift relative to its current Pro versions as they provide meaningful productivity improvements for end users. Whilst it’s still early days, ServiceNow appears well placed to capitalise on the Generative-AI opportunity and we believe it could be a meaningful driver for the company’s next phase of growth.”
6. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 109
Adobe Inc. (NASDAQ:ADBE) is an application software company. It offers the Document Cloud, a unified cloud-based document services platform, among more.
Brad Zelnick at Deutsche Bank maintained a Buy rating on Adobe Inc. (NASDAQ:ADBE) shares on September 15 while raising his price target on the stock from $550 $610.
At the end of the second quarter, 109 hedge funds were long Adobe Inc. (NASDAQ:ADBE), with a total stake value of $6.1 billion.
Harding Loevner mentioned Adobe Inc. (NASDAQ:ADBE) in its second-quarter 2023 investor letter:
“Although the market initially feared that Adobe Inc. (NASDAQ:ADBE) would lose out to Al image-generating programs Dall-E, Midjourney, and Stable Diffusion, the design-software giant has since released its own generative Al model called Firefly. One feature of Firefly is that it can help designers generate ideas and create and manipulate images more quickly in Photoshop or Illustrator that can then be processed by other Adobe products for further development, fostering a seamless workflow. There’s more work involved when trying to manipulate images created by outside tools. Also, because Firefly is trained on Adobe’s vast inventory of stock images and other licensed content, it can generate professional-quality, commercially viable results, further setting it apart from generic models that are often trained on copyrighted content that isn’t properly licensed. These are just two examples of how Al enhances the Adobe suite, which should allow the company to raise subscription prices and upsell users.”
Like Oracle Corporation (NASDAQ:ORCL), ServiceNow, Inc. (NYSE:NOW), and Snowflake Inc. (NYSE:SNOW), Adobe Inc. (NASDAQ:ADBE) is a highly popular cloud computing stock to invest in.
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Disclosure: None. 15 Best Cloud Computing Stocks Heading into 2024 is originally published on Insider Monkey.