10 Cloud Computing Stocks to Watch As AI Arms Race Is Underway

Published on July 12, 2023 at 8:49 am by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at 10 cloud computing stocks to watch as the AI arms race is underway. To skip our detailed analysis of the latest developments in this space, you can go directly to see the 5 Cloud Computing Stocks to Watch As AI Arms Race Is Underway.

This year, all any tech investor can talk about is artificial intelligence (AI). This trend was brought about primarily due to the launch of an AI arms race with, some might argue, the launch of ChatGPT. When OpenAI released the now-popular chatbot for free to the public, no one could have guessed that it would revolutionize the AI industry – but it did. Now every company is rushing to partake in this area, entering into deals and partnerships, making acquisitions, and above all, trying their best not to become obsolete.

China Enters The Fray

After ChatGPT and OpenAI sparked an AI race in the US, Chinese companies have also begun to express an interest in the area. This April, for instance, China’s Alibaba Group Holding Limited (NYSE:BABA) unveiled its own ChatGPT-style technology under the name Tongyi Qianwen. This large language model has been trained similarly to ChatGPT on large amounts of data so it can generate content. According to CNBC, the company began rolling out this product in June. The company’s cloud computing division is taking the lead in its AI charge, and it commented that Tongyi Qianwen is set to be integrated into a “digital assistant called Tingwu.”

Other moves taken by Chinese companies in the AI race include Baidu, Inc.’s (NASDAQ:BIDU) launch of its own AI chatbot, called Ernie Bot, as a potential rival to ChatGPT. Alongside these companies, other Chinese tech giants have also commented that they are in the process of developing ChatGPT-style AI technologies as well. This interest from Chinese companies when it comes to the AI race is unsurprising, especially considering the long-standing tech war that has been raging on between the US and China. According to a Wall Street Journal article from this July, this tech war is now beginning to include cloud computing and AI companies as well, as the Biden administration draws up a proposal to restrict Chinese companies’ access to US cloud computing services. Provided this proposal goes forward and is accepted, cloud computing services providers within the US, such as Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN), will be bound to ask the government’s permission before they provide cloud computing services using advanced AI chips to Chinese customers. Such a development is making it imperative for investors to keep a close eye on cloud computing stocks today to see how they may be affected.

Will Cloud Computing Companies Benefit From The AI Arms Race?

Cloud computing and AI are interconnected in many ways, with both helping each other develop and grow to new heights. AI can help cloud computing be cost-effective, better at data management, more productive, automated, and secure. For example, AI has proven to help Amazon.com, Inc.’s (NASDAQ:AMZN) Glacier storage service cut costs by using machine learning to identify and remove duplicate data. In the same vein, cloud computing has helped AI develop further. For example, cloud delivery models like Infrastructure-as-a-Service models have been developing an infrastructure environment for AI practitioners.

The growing and undeniable interconnectedness of these fields shows that cloud computing companies and stocks may be set to benefit from the ongoing AI race. As more companies rush to incorporate AI into their businesses, cloud computing will be also brought into the spotlight as an active enhancer of AI products. According to CNBC, companies like Microsoft Corporation (NASDAQ:MSFT) noted the benefit their cloud businesses will see due to the AI craze as early as this February. In Microsoft Corporation’s (NASDAQ:MSFT) case, the company’s cloud computing division, which goes by the name Azure, is expected to help it monetize its AI capabilities further. Keeping this in mind, we have compiled a list of some of the top cloud computing companies on the market today, selected from the holdings of one of the best cloud computing ETFs, The Global X Cloud Computing ETF (CLOU). These are the stocks investors should keep an eye on to see which way they swing in light of US-China tensions and the AI arms race.

Pixabay/Public domain

Our Methodology

To select the stocks for our list, we went through the top holdings of The Global X Cloud Computing ETF (CLOU) and shortlisted them based on the number of hedge funds holding stakes in each company by using Insider Monkey’s hedge fund data for the first quarter. We then ranked the top 10 stocks based on their upside potential as of July 5, from the lowest to the highest, using data sourced from TipRanks.

Cloud Computing Stocks to Watch As AI Arms Race Is Underway

10. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 66

Upside Potential: 0.43%

Analyst Price Target: $63.73

Shopify Inc. (NYSE:SHOP) is an information technology company providing a commerce platform and services internationally. It is based in Ottawa, Canada.

There were 66 hedge funds long Shopify Inc. (NYSE:SHOP) in the first quarter. Their total stake value was $2.5 billion.

Shopify Inc. (NYSE:SHOP) is a completely cloud-based e-commerce company, and it has also partnered with Google Cloud to provide its merchants with more competitive computing technologies.

Andrew Boone, an analyst at JMP Securities, reiterated a Market Outperform rating on Shopify Inc. (NYSE:SHOP) shares on June 22. The analyst also maintains a $70 price target on the stock.

ARK Investment Management was the most prominent shareholder in Shopify Inc. (NYSE:SHOP) at the end of the first quarter, holding 13.9 million shares in the company.

In its first-quarter 2023 investor letter, RiverPark Advisors said the following about Shopify Inc. (NYSE:SHOP):

“Shopify Inc. (NYSE:SHOP): Shopify shares were a top contributor in the quarter as the market focused on the company’s recent price increases and its ongoing market share gains in e-commerce gross merchandise volumes (GMV). Earlier in the quarter the company reported better-than-expected 4Q results, with 26% revenue growth and $248 million of FCF (at a 14% margin), significantly better than the Street consensus of -$109 million.

Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay and its pick, pack and ship Shopify Fulfillment Network, should continue to drive revenue growth of about 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”

Shopify Inc. (NYSE:SHOP), like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN), is a cloud computing stock investors are keeping an eye on.

9. Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 56

Upside Potential: 1.52%

Analyst Price Target: $64.89

Twilio Inc. (NYSE:TWLO) was spotted in the portfolios of 56 hedge funds in the first quarter, with a total stake value of $2.1 billion.

As of May 10, Oppenheimer’s Ittai Kidron holds an Outperform rating on Twilio Inc. (NYSE:TWLO) shares, alongside a $75 price target.

Operating as an internet services and infrastructure company, Twilio Inc. (NYSE:TWLO) is based in San Francisco, California. The company offers software and communications solutions internationally, and it is a leading provider of cloud-based communications infrastructure, which is in high demand.

Aristotle Atlantic Partners, LLC mentioned 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.”

Like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN), Twilio Inc. (NYSE:TWLO) is a promising cloud computing stock to watch today.

8. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 289

Upside Potential: 2.65%

Analyst Price Target: $347.94

Microsoft Corporation (NASDAQ:MSFT) is a systems software company based in Redmond, Washington. It is also a leading global provider of cloud computing services for businesses since it has been making significant investments in cloud and artificial intelligence.

Holding 39.2 million shares in the company, Bill & Melinda Gates Foundation Trust was the largest shareholder in Microsoft Corporation (NASDAQ:MSFT) at the end of the first quarter.

We saw Microsoft Corporation (NASDAQ:MSFT) in the 13F holdings of 289 hedge funds at the end of the first quarter, with a total stake value of $57.9 billion.

Daniel Ives at Wedbush holds an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) shares as of July 5. The analyst also holds a $375 price target on the shares.

L1 Capital made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its first-quarter 2023 investor letter:

“We commented in the December 2022 Quarterly Report “sentiment towards many high-quality technology and ecommerce related businesses like Amazon and Alphabet is negative. Capital flows and an over-emphasis on short-term challenges is driving share prices well below fair value, providing compelling investment opportunities for longer term investors”. In that report we outlined in detail why Amazon’s share price has been oversold and offered compelling value.

During the March 2023 quarter the share price of many large capitalisation technology companies increased significantly. The Fund has investments in Alphabet, Amazon and Microsoft Corporation (NASDAQ:MSFT) and their share prices increased 17%, 23% and 20% (in U.S. dollars), respectively. While we continue to see value in these privileged, high-quality businesses, share prices are no longer trading at materially oversold levels and we have selectively started to trim some of the Fund’s exposure. Microsoft was trimmed due to share price performance and position size.”

7. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 204

Upside Potential: 8.59%

Analyst Price Target: $132.64

BofA Securities analyst Justin Post reiterated a Buy rating on Alphabet Inc. (NASDAQ:GOOGL) shares on July 5. The analyst also maintains a $128 price target on the stock.

Alphabet Inc. (NASDAQ:GOOGL) is a big tech company playing a major role in the cloud computing industry with Google Cloud, which is a suite of cloud computing services. Google Cloud runs on the infrastructure Alphabet Inc. (NASDAQ:GOOGL) uses internally for its consumer products, like Google Search and Gmail.

A total of 204 hedge funds were long Alphabet Inc. (NASDAQ:GOOGL) in the first quarter. Their total stake value in the company was $17.7 billion.

ClearBridge Investments said the following about Alphabet Inc. (NASDAQ:GOOGL) in its first-quarter 2023 investor letter:

“While Alphabet Inc. (NASDAQ:GOOG) was another positive contributor in the quarter, we trimmed the position given the launch of Microsoft’s new generative AI product (“Bing AI”) which is targeted directly at Alphabet’s core search business. While we believe Alphabet’s business model is likely to remain resilient given the breadth of its user data as well as its internal innovations around AI, we continue to monitor the area closely given the rapid adoption of ChatGPT and other generative AI products.”

6. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 243

Upside Potential: 8.68%

Analyst Price Target: $141.09

Amazon.com, Inc. (NASDAQ:AMZN) plays its part in the cloud computing industry with Amazon Web Services, its cloud business.

On July 3, Sachin Mittal at DBS Bank initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) shares with a Buy rating and a $150 price target.

Amazon.com, Inc. (NASDAQ:AMZN) was found in the 13F holdings of 243 hedge funds in the first quarter, with a total stake value of $25.8 billion.

L1 Capital mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its first-quarter 2023 investor letter:

“We commented in the December 2022 Quarterly Report “sentiment towards many high-quality technology and ecommerce related businesses like Amazon and Alphabet is negative. Capital flows and an over-emphasis on short-term challenges is driving share prices well below fair value, providing compelling investment opportunities for longer term investors”. In that report we outlined in detail why Amazon’s share price has been oversold and offered compelling value.

During the March 2023 quarter the share price of many large capitalisation technology companies increased significantly. The Fund has investments in Alphabet, Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft and their share prices increased 17%, 23% and 20% (in U.S. dollars), respectively. While we continue to see value in these privileged, high-quality businesses, share prices are no longer trading at materially oversold levels and we have selectively started to trim some of the Fund’s exposure.”

Click to continue reading and see the 5 Cloud Computing Stocks to Watch As AI Arms Race Is Underway.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

The whispers are turning into roars.

Artificial intelligence isn’t science fiction anymore.

It’s the revolution reshaping every industry on the planet.

From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.

Here’s why this is the prime moment to jump on the AI bandwagon:

Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.

Imagine every sector, from healthcare to finance, infused with superhuman intelligence.

We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.

This isn’t a maybe – it’s an inevitability.

Early investors will be the ones positioned to ride the wave of this technological tsunami.

Ground Floor Opportunity: Remember the early days of the internet?

Those who saw the potential of tech giants back then are sitting pretty today.

AI is at a similar inflection point.

We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

This isn’t just about making money – it’s about being part of the future.

So, buckle up and get ready for the ride of your investment life!

Act Now and Unlock a Potential 10,000% Return: This AI Stock is a Diamond in the Rough (But Our Help is Key!)

The AI revolution is upon us, and savvy investors stand to make a fortune.

But with so many choices, how do you find the hidden gem – the company poised for explosive growth?

That’s where our expertise comes in.

We’ve got the answer, but there’s a twist…

Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap.

That’s the potential you’re looking at. This isn’t just about a decent return – we’re talking about a 10,000% gain over the next decade!

Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity.

This company boasts the most advanced technology in the AI sector, putting them leagues ahead of competitors.

It’s like having a race car on a go-kart track.

They have a strong possibility of cornering entire markets, becoming the undisputed leader in their field.

Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.

We want to make sure none of our valued readers miss out on this groundbreaking opportunity!

That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 75%.

For a ridiculously low price of just $24, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!

Here’s why this is a deal you can’t afford to pass up:

The Name of the Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.
Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.
Lifetime Money-Back Guarantee: If you’re not absolutely satisfied with our service, we’ll provide a full refund ANYTIME, no questions asked.

Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.

Here’s what to do next:

Head over to our website and subscribe to our Premium Readership Newsletter for just $24.
Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.
Sit back, relax, and know that you’re backed by our ironclad lifetime money-back guarantee.

Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!

Subscribe Now!

A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…

Insider Monkey Ads

Markets

Insider Trading

Hedge Funds

Retirement

Opinion

Log In

Sign Up