Top 3 Cloud Stocks for 2021!
Did you know that cloud stocks represent one of the FASTEST growing industries in the world right now?
About one-third of a company’s IT budget now goes to cloud services and analysts predict that 94% of all workloads will be processed through cloud data centres.
That has helped the global cloud computing market to exceed $330 billion in 2020 with even more growth expected in 2021.
Read on to discover some of the best cloud stocks to invest in this year! ▼▼▼
In this article, you will learn:
✅ What cloud computing stocks are.
✅ Why cloud computing is predicted to be one of the fastest-growing industries this year.
✅ The top cloud stocks to invest in and the cloud computing companies that are exciting investors and are forecasted for exponential growth this year.
✅ How to trade the best cloud computing stocks via the Trade.MT5 account so you can trade via Contracts for Difference (CFDs) and potentially profit from rising and falling markets using leverage!
✅ How to supercharge your trading platform to receive actionable trading and investing ideas in real-time on thousands of different markets using the exclusive Admirals Supreme Edition platform which is FREE to download!
✅ How to get started with a FREE demo trading account so you can test all the features and services offered by Admirals, as well as your own trading and investing ideas in a virtual environment until you are ready to go live.
✅ And much, much more!
What are Cloud Stocks?
Cloud stocks refer to companies that operate in the world of cloud computing. Cloud technology itself refers to the way data is stored and managed. A more technical definition of the cloud are servers that host and store data for users in a physical location, thereby increasing security and reliability. No longer do users need to store the data themselves on a USB stick, they can upload their data to a cloud’s servers where they will store it for you.
The companies that operate in the cloud computing space either operate the data servers, own the data servers or provide services for users using the data servers. There are three different types of clouds that companies provide with the only difference being who owns the infrastructure.
▶️ Private: This is where the cloud is created for internal use within an organisation.
▶️ Public: This is where the cloud is used to deliver services over the internet.
▶️ Hybrid: This is a combination of the two above.
There are also three main types of services provided by different cloud companies.
▶️ Software as a Service (SaaS). These are applications that are accessed by clients via mobile apps or web browser. Examples include Google Drive, Google Play, etc.
▶️ Platform as a Service (Paas). This is a place where apps are developed and tested by developers.
▶️ Infrastructure as a Service (IaaS). This is a virtual environment for computing resources.
With more than $330 billion spent on cloud infrastructure in 2020, the companies offering cloud services are high on investors’ watchlists. The coronavirus pandemic forced many companies to think differently and adopt different business models.
With more and more companies moving online and into the digital arena, the cloud computing sector is forecasted to explode. This is likely to create huge demand in some of the top cloud stocks.
The Big 3 Cloud Stocks & Types You Need to Know!
There are many different companies that are likely to benefit from the growth in the cloud computing sector. We explore some of the best cloud computing stocks in the next section. However, there are three big cloud stocks that every investor needs to know about.
Amazon, Microsoft and Alphabet account for more than 57% of the global cloud computing market! These are the three biggest players in the market place, with the Alibaba Cloud and IBM Cloud trying to catch up. However, the cloud sector is vast with other companies such as Intel, NVIDIA, Salesforce.com, Oracle, Netflix and many others playing a big part.
Source: Geekwire, 2 March 2021
All of these companies involved in cloud computing can be split up into three different types of cloud stocks. These include:
▶️ Cloud Providers. Companies such as Amazon, Microsoft and Alphabet own the biggest data centres in the world and handle most of the data across the internet. In fact, Amazon’s AWS Cloud controls a third of the entire market!
▶️ Cloud Maintainers. To manage and maintain the cloud, cloud providers need software and hardware to do so. Companies such as Intel and NVIDIA provide chips that are used to build the servers to store the data uploaded to a cloud providers infrastructure. Network providers such as Cisco Systems provide hardware that helps keep the cloud running at a fast pace.
▶️ Cloud Users. The majority of companies use the cloud to provide services to their users. Most people will be familiar with cloud users such as Netflix. All of the company’s TV shows and movies are stored on the Amazon AWS cloud which makes it easily accessible for Netflix’s users.
There are many more companies that are becoming cloud users every single day. This growth is likely to help cloud stocks that are cloud providers and cloud maintainers the most. Keeping up to date with the share price of these cloud stocks can be key to finding high-quality investment opportunities.
Did you know that the MetaTrader 5 trading platform allows you to view live and historical prices of thousands of different markets from all around the world? No matter what type of cloud stocks you are looking for, you can find a huge selection from the more than 3,000+ instruments available from the platform provided by Admirals.
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The 3 Best Cloud Stocks for This Year!
As discussed in the previous section, there are many different cloud stocks that are likely to benefit from the forecasted growth for the industry whether it is a cloud provider, cloud maintainer or cloud users. But, within these three types of cloud computing stocks, it always comes back to the three main players.
Below, we discuss the historical share price activity for the three big players to try and identify the potential opportunities and risks that lie ahead. Let’s get started!
#1. Amazon (AMZN)
Amazon’s AWS (Amazon Web Service) cloud service only makes up around 12% of the company’s sales. However, while this may be small it is one of Amazon’s highest profit margin divisions accounting for more than 57% of Amazon’s quarterly operating income. And, surprisingly, many analysts believe there is still much more room for growth.
In 2020, Amazon’s AWS raked in an incredible $13.5 billion profit which accounted for more than 63% of the company’s entire operating profit for the year! In the same year, Amazon announced a range of newly signed contracts with some very large companies from the digital payment processing, medical and sports sectors.
Of course, this is just one part of the business that is booming. It just so happens that the rest of Amazon’s business is also booming! The company’s e-commerce business was already well-positioned before the coronavirus pandemic but has done even better since.
Source: Admirals MetaTrader 5, #AMZN, Monthly - Data range: from 1 Feb 2013 to 2 Mar 2021, accessed on 2 Mar 2021 at 12:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
In the long-term, monthly price chart of Amazon’s share price above it is clear to see the phenomenal growth over the past several years. However, during the second half of 2020, the share price lost some steam as investors utilised sector rotation strategies.
This involved banking gains on high-flying tech stocks and investing them in value stocks that were trading at discounts from the pandemic led sell-off. At some point, however, investors may start to look at Amazon again.
The 20-period (blue), 50-period (red) and 100-period (green) exponential moving averages are all still confirming an uptrend, as they point higher. Interestingly, buyers have turned up at the 20-period moving average several times before and this could be a level to watch in the future.
#2. Microsoft (MSFT)
Microsoft’s Azure cloud service comes in second place in the global cloud market with a 16.8% share and growing. Of all the early-stage cloud users, Azure is chosen by around 41% of companies, second to AWS. However, Microsoft’s Azure cloud service makes it one of the fast-growing cloud computing stocks.
While it has a long way to compete against AWS, many analysts are more bullish on Microsoft stock than ever before because of the growth in its cloud computing division. Research shows that they are also starting to gain a larger market share from the competition.
In Microsoft’s first earnings report of 2021, the company posted 50% year over year growth in the Azure cloud business. This compares to just 28% growth in Amazon Web Services. Analysts are bullish about Microsoft’s prospects because they already have a strong user base with Office 365, making the transition to the cloud seamless.
Source: Admirals MetaTrader 5, #MSFT, Monthly - Data range: from 1 Jan 2013 to 3 Mar 2021, accessed on 3 Mar 2021 at 12:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
In the long-term, monthly price chart above, it is clear to see the exponential growth in Microsoft’s share price. All the moving averages on the chart are pointing upwards confirming the trend is still going higher. However, price is overextended away from its 20-period (blue) exponential moving average, suggesting a pullback to this level could happen at some point.
Historically, the price has bounced from the 20-period moving average, such as in 2015, 2016 and 2020. As the trend is very strong, more active traders may drop to lower timeframes to try and find more opportunities. Using Contracts for Difference (CFDs) to help navigate the lower timeframes offers some interesting features.
With CFDs, traders can potentially profit from both rising bull markets and falling bear markets by trading long and short. CFDs also allow traders to trade on margin. This means you can potentially control a larger position size with a smaller deposit. However, there are risks and benefits associated with this. You can learn more in this ‘CFD Trading Guide,’ or click on the banner below to open an account. ▼▼▼
#3. Alphabet (GOOG)
Google’s cloud service comes in third place in the global cloud market with an 8.5% share. While much smaller than its rivals, Google Cloud has one of the strongest year on year growth metrics. In 2018, the revenue from Google Cloud was $5.8 billion. In 2020, the total revenue from Google Cloud was $13.1 billion.
Interestingly for investors, Google is still investing a lot of money to grow its cloud business as it is still relatively small and has huge growth potential. This led to the company announcing an operating loss for 2020. However, the investment is likely to help the company grow even more profitable in the future.
Source: Admirals MetaTrader 5, #GOOG, Monthly - Data range: from 1 Jan 2013 to 3 Mar 2021, accessed on 3 Mar 2021 at 12:35 pm GMT. Please note: Past performance is not a reliable indicator of future results.
In the long-term, monthly price chart of Alphabet’s share price above, it is clear to see the long-term uptrend. As buyers have been in control of the market for quite some time it does open up some interesting trading and investing opportunities.
You can actually view these trading and investing opportunities in real-time from the Admirals Premium Analytics feature. To access this follow the steps below:
- Open a live account. If you haven’t done so already click here.
- Log in to the Trader’s Room where you can manage all of your accounts, access downloads and premium services.
- Click on the Premium Analytics tab in the client portal dashboard.
- Search for your stock such as #GOOG (the symbol for Alphabet Inc).
- Maximise the Technical Insight window. ▼▼▼
Source: Admirals Premium Analytics, 3 March 2021
In the above screenshot, taken from the Admirals Premium Analytics dashboard, when searching for #GOOG in the Technical Insight Lookup Indicator it shows that there are (at the time of writing) 13 technical events taking place across the short-term, intermediate-term and long-term.
You can view each one of the technical events individually with each event explaining what it is and why it is important. This could be a very useful tool when used in combination with fundamental analysis such as analysing sector themes like cloud stocks.
Click on the banner below to learn more. ▼▼▼
Cloud Computing Stocks - The Best of the Rest!
As the cloud computing sector grows, the big three cloud stocks discussed above are likely to benefit the most. However, there is a range of other cloud computing stocks that will also benefit from this growth. We discuss a few below.
#1. DataDog (DDOG)
DataDog monitors the performance of different applications. The company provides a unique cloud offering as it is cloud-native which means it works with applications that use Amazon Web Services, Microsoft Azure and the Google Cloud.
The company only went public in 2019 but its share price has risen more than 100% higher. In its latest earnings report, DataDog reported an 87% year on year growth with a higher customer spend and more third-party integrations.
Source: Admirals MetaTrader 5, DDOG, Weekly - Data range: from 15 Sep 2019 to 3 Mar 2021, accessed on 3 Mar 2021 at 12:45 pm GMT. Please note: Past performance is not a reliable indicator of future results. Last five-year performance not available.
#2. Alibaba (BABA)
Alibaba has a big portfolio of businesses - similar to Amazon. One growing business is Alibaba’s Cloud (AC) division which provides cloud computing services to digital and online business. The division’s most recent development has been a hybrid cloud offering which they say will help them target SMEs (small to medium enterprises) who want to scale up.
In its latest earnings report, the company reported a 60% year on year increase in revenue, highlighting the growth this sector could bring to the bottom line.
Source: Admirals MetaTrader 5, #BABA, Monthly - Data range: from 1 Mar 2016 to 3 Mar 2021, accessed on 3 Mar 2021 at 12:45 pm GMT. Please note: Past performance is not a reliable indicator of future results. Full five-year performance not available.
Other notable mentions in the best of the rest top cloud stocks include:
▶️ IBM Cloud - A division of IBM providing cloud computing services to businesses, including storage, networking, developer solutions, security management and more.
▶️ Salesforce.com - A cloud-based customer relationship management (CRM) platform to help companies acquire and retain more customers.
▶️ Crowdstrike - A cloud-based cybersecurity platform that leverages artificial intelligence to catch cyber attacks.
▶️ Cloudflare - A cloud-based services company providing website security and infrastructure services.
▶️ Docusign - A cloud-based company that provides the ability to sign financial documents electronically, removing the need for paper contracts.
How to Invest in Cloud Stocks
To start investing in your chosen cloud stock, you can follow the steps below.
- Open your MetaTrader 5 trading platform provided by Admirals. Alternatively, start your free download here.
- Open the Market Watch window by selecting the View option from the top menu.
- From the Market Watch window, right-click and select Symbols. Here you can search from the +3,000 instruments available to trade on via Admirals. Start typing the name of your cloud stock and a selection of instruments will appear.
- Select your relevant instrument and press OK to add the symbol to your Market Watch list. To view a live chart of the symbol’s price, drag the text of the symbol from the Market Watch window onto the chart.
- To open a trading ticket, right-click on the chart and select Trading and then New Order. A trading ticket will open up for you to input your own entry, stop loss and take profit levels as well as your position size.
A screenshot showing the MetaTrader 5 trading platform provided by Admirals with a trading ticket open on the chart. 23 February 2021.
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Why Invest in Cloud Stocks with Admirals?
✔️ Invest with a well-established company authorised and regulated by the UK Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC), among other well-known financial regulators.
✔️ Supercharge your MetaTrader 5 trading platform completely FREE by upgrading to the Supreme Edition platform to access the Technical Insight Lookup indicator.
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✔️ Open a Trade.MT5 trading account to access more than 3,000 financial CFDs to potentially profit from rising and falling markets across stocks, ETFs, indices, commodities, currencies and more!
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You can also test your trading and investing ideas in a virtual environment until you are ready to go live!
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.