AI is enabling a digital transformation across most industries, and cloud services sit at the very center of this change. The industry continues to grow at a rapid pace, and if recent analyst remarks are anything to go by, it’s not stopping anytime soon.
Angelo Zeno, Senior Equity Analyst at CFRA Research, expects the industry to grow at over 30% over the next couple of years at least. However, he was quick to point out that success in the industry is now not about bookings, but the pace at which one can execute those deals. This suggests companies that are established players or lean enough to quickly adapt to customer needs will succeed. Here’s what he said while talking to Schwab Network:
“Cloud is a business that I think will continue to see north of 30% annualized growth here over the next two to three years…. I think you’re in an environment right now where I agree it’s not about bookings anymore, it’s about execution.”
On the same show, Shai Balour, who is the Chief Market Strategist at Futurum Equities, pointed out how Alphabet had successfully captured this growth. He said Google Cloud is now a second engine for the company. This should help Google diversify away from its ads business, which frequently faces regulatory and privacy challenges.
To identify which cloud companies hold the most promise in the coming months, we present our selection of the most promising cloud stocks according to analysts.
Our Methodology
To compile our list of the 10 most promising cloud stocks according to analysts, we identified stocks with a market cap of at least $2 billion that derive a significant portion of their revenue from cloud services or cloud computing infrastructure. We reviewed various financial media and ETFs to compile a list of these stocks. We then filtered for companies with at least 40% upside and ranked them by upside as of market close on January 28, using CNN’s compilation of analyst price targets. We have also included the number of hedge funds that hold the stock as of Q3 2025.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Box, Inc. (NYSE:BOX)
Potential Upside: 43.56%
Number of Hedge Fund Holders: 35
On January 21, Citi analyst Steve Enders maintained his Buy rating on Box, Inc. (NYSE:BOX) stock, along with the price target of $40. The firm’s price target implies over 50% upside from the current levels.
Separately, on January 15, the company announced that Box Extract is now generally available. Leveraging advanced generative AI models from providers such as OpenAI, Google, and Anthropic, and paired with intelligent automated features, Box Extract enables enterprises to securely and intelligently extract critical information from their content and store it as metadata within Box.
A large number of companies have untapped data, and this product has made it easier than ever for the companies to utilize that data. With this platform, organizations can easily automate workflows, gain faster access to valuable information, and speed up decision-making.
Aaron Levie, co-founder and CEO of Box, explained how the product is beneficial:
”Enterprises are sitting on a gold mine of data in their untapped content. With Box Extract, that information is now unlocked and can transform how businesses analyze information and make decisions. By turning unstructured content into structured, usable data, organizations can deliver real-world impact by having their content actively work for them across their most important lines of business.”
Box, Inc. (NYSE:BOX) operates as a provider of a cloud content management platform. The company’s platform enables organizations of various sizes to share and manage their content from anywhere on any device across Japan and the US. Box, Inc. was founded in 2005 and is based in Redwood City, California.
9. Datadog, Inc. (NASDAQ:DDOG)
Potential Upside: 43.6%
Number of Hedge Fund Holders: 72
On January 22, Stifel upgraded Datadog, Inc. (NASDAQ:DDOG) from Hold to Buy, raising the price target to $205 from $160. The upgrade comes amid expectations of a strong Q4 earnings report. Similarly, on January 16, RBC Capital analyst Matthew Hedberg reaffirmed the firm’s price target of $175, along with a Buy rating on the stock. The firm’s price target implies a further 25% upside from the current levels.
However, Citi analyst Fatima Boolani lowered the firm’s price target on the stock from $200 to $175 while maintaining a Buy rating on January 15. The price target adjustment came as part of the firm’s broader update to price targets in the infrastructure software group tied to its 2026 outlook. The firm highlighted that the strong momentum seen across the sector during 2025 is anticipated to continue into 2026.
Pressured by concerns about potential category commoditization, OpenAI’s concentrated influence, and pricing headwinds, the stock has lagged recently. Analyst Fatima Boolani also noted the mixed investor sentiment toward the stock and said:
”From our investor discussions, we’ve also sensed mixed views on the aggregate AI-native exposure, which, while clearly attractive and corroborating DDOG’s status as an ‘AI Winner’ is also being perceived more measuredly, given business cycle volatility and outsized churn risk considerations in this crop of customers – almost akin to the ZIRP-era startups to whom DDOG had exposure.”
Datadog, Inc. (NASDAQ:DDOG) operates a security and observability platform for cloud applications. It offers a comprehensive suite of products, including log management, continuous profiler, data observability, network monitoring, error tracking, digital experience monitoring, infrastructure & application performance monitoring, and others.
