A trend that started back in the 2010s has created an ideal environment for cloud computing stocks now. Large firms have been moving data to the cloud in increased rates, as well as continuing to buy a multitude of tools from cloud-infrastructure providers and software makers. Among these products are middleware, servers, operating systems and IT security offerings. More recently, public cloud firms have begun selling AI-powered systems, such as virtual assistants, marketing tools and complex data-analysis offerings.
Given the strength of these trends and the strong appeal of the products being sold by the cloud firms, it’s not surprising that Gartner (NYSE:IT), the very well-regarded tech research firm, estimates that expenditures on the cloud will surge “from $250 billion in 2020 to almost $600 billion in 2023 and an estimated $725 billion in 2024.” For investors who want to profit from the coming avalanche of spending on the cloud, here are three top cloud computing stocks to buy now.
Amazon.com (AMZN)
The top line of Amazon’s (NASDAQ:AMZN) cloud unit, AWS, climbed 13% in Q4 versus the same period a year earlier to $24.2 billion. Additionally, its Q4 operating margins came in at an impressive 24%.
Snap (NYSE:SNAP), Airbnb (NASDAQ:ABNB) and Anthropic are all using its AI chips. Meanwhile, Andy Jassy reported on Amazon’s Q4 earnings call that thousands of companies have been utilizing its AI-powered data analysis tool, Bedrock.
In the wake of the results, Goldman Sachs reported that the firm was benefiting from the reacceleration of cloud-migration trends and a rising contribution of AI revenue across all parts of the cloud. Citi recently named AMZN stock as one of three key players in AI. Also noteworthy is that 2,519 holders bought 312.9 million shares of the name last quarter, while only 161.3 million shares of AMZN were unloaded.
Veeva (VEEV)
Next on our list of cloud computing stocks is Veeva (NYSE:VEEV), which provides cloud tools for life sciences companies. Veeva is benefiting from the success of weight-loss drugs, vaccines and gene-editing technologies. It also has an attractive PEG ratio of 1.67.
In the third quarter, Veeva’s top line jumped 11.6% versus the same period a year earlier, while its bottom line, excluding certain items, advanced 19% year-over-year to $218.7 million.
Late last year, two huge pharmaceuticals makers — Bayer (OTCMKTS:BAYRY) and GSK (NYSE:GSK) — decided to use Vault CRM, Veeva’s cloud based customer-relation management tool for the life sciences sector. Patrick Moeller, Bayer’s global head of commercial IT and digital pharma, said:
“Partnering with Veeva sets us up with the long-term technology and data foundation to gain the speed and agility needed for the complexities of modern medicine. Vault CRM and Veeva OpenData are essential to driving more precise and effective customer engagement in every region and therapeutic area.”
SAP (SAP)
Germany-based SAP (NYSE:SAP) provides many cloud-based software products. The firm recently announced that it was releasing many tools to help its customers with cloud migration. SAP will then provide customers with IT security offerings, data-analysis tools and compliance systems. These steps will enable SAP to take market share away from the large cloud-infrastructure players, meaningfully boosting its own top and bottom lines in the process.
SAP’s solid cloud business now generates 44% of its revenue, leaving it well-positioned to deliver impressive top- and bottom-line growth going forward.
Finally, ever-growing tech giant Nvidia (NASDAQ:NVDA) is using SAP’s cloud offering. Meanwhile, Microsoft (NASDAQ:MSFT) is using SAP’s human capital management tool, SuccessFactors, with MSFT’s AI-powered offerings.
Within the next year or two, SAP’s partnerships with those two companies are likely to boost its top and bottom lines. These partnerships should also inspire many other tech firms to follow in the two giants’ footsteps by utilizing the European firm’s software.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.