Cloud computing continues to be one of the fastest-growing segments of the technology industry. Fortune Business Insights forecasts that revenue generated from cloud computing will grow from $677.95 billion in 2023 to $2.43 trillion by 2030, representing a compound annual growth rate (CAGR) of 20%. This outlook has many investors on the hunt for the most promising cloud computing stocks in today’s market.
Why? As more companies migrate their businesses to the cloud and demand newer products to help their operations grow and compete, a select number of players are coming to dominate the space. For these concerns, cloud computing is becoming a major driver of their sales and profit growth.
And while artificial intelligence (AI) might be getting all the attention this year, CEOs of leading tech companies are talking as much about cloud computing as they are about chatbots and generative AI applications.
As cloud computing continues to thrive, we suggest that these are the only three cloud computing stocks to consider in August 2023.
Alphabet (GOOG/GOOGL)
In this year’s first quarter, Alphabet’s (NASDAQ:GOOG/NASDAQ:GOOGL) cloud computing business unit turned profitable for the very first time. By the second quarter, Google Cloud generated more than $8 billion in revenue, fueling the company’s overall earnings beat. The Q2 performance of Alphabet’s cloud computing business was up 28% from a year earlier and exceeded Wall Street’s revenue expectations of approximately $7.8 billion.
Alphabet CEO Sundar Pichai trumpeted the cloud computing unit during a Q2 earnings call with analysts and media, saying: “With Google Cloud, we’ve been really embracing an open architecture. We’ve embraced customers wanting to be multi-cloud when it makes sense for them.”
Pichai talked almost as much about cloud computing as he did about artificial intelligence. Looking forward, Alphabet says it plans to further expand its cloud computing products that include infrastructure and platform services, as well as collaboration tools.
Additionally, the company plans to better integrate its cloud computing unit with artificial intelligence as it seeks to enhance the offering for customers. GOOGL stock has increased 49% so far in 2023.
Salesforce (CRM)
Things look to be turning a corner at Salesforce (NYSE:CRM), the largest cloud-based software company in the U.S. After a difficult period that saw co-CEO Brett Taylor resign and activist investor Elliott Management build a billion-dollar stake in the company and push for change, their most recent earnings were a strong beat and raise. Salesforce reported earnings per share of $1.69 versus $1.61 that was forecast by analysts who cover the company. Revenue came in at $8.25 billion versus $8.18 billion that was forecast.
Salesforce also raised its forward guidance, saying it expects earnings of $1.89 to $1.90 a share and revenue of $8.51 billion to $8.53 billion. Analysts had expected $1.70 in earnings and $8.49 billion in revenue.
After multiple earnings disappointments, Salesforce seems to have got its mojo back. The strong results also seemed to buy Salesforce some breathing room as Elliott Management said it would not move forward with its director nominations to the company’s board as planned.
CRM stock has gained 55% year to date.
Amazon (AMZN)
Amazon Web Services, or AWS, continues to be a strong growth driver at the e-commerce company. The Amazon (NASDAQ:AMZN) subsidiary that provides on-demand cloud computing platforms to clients saw its sales climb 12% in Q2 to $22.1 billion, which was more than the $21.8 billion forecast by Wall Street. Amazon CEO credited the performance of the company’s cloud unit with helping it to post its biggest earnings beat since the fourth quarter of 2020.
Perhaps most impressive, AWS accounted for 70% of Amazon’s $7.7 billion in operating profit during Q2 of this year. The company also noted that its AI products that have been integrated into AWS are being used by numerous customers, including 3M (NYSE:MMM) and HSBC (NYSE:HSBC). As with the other companies on this list, Amazon says it plans to continue pushing the growth of its cloud computing unit and sees it as a key driver of future growth. AMZN stock has risen 57% this year.
On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.