5 Best Cloud Computing Stocks To Buy

1. Amazon.com (NASDAQ:AMZN)

Amazon is the #1 cloud computing stock to buy according to hedge funds. There were a total of 248 hedge funds (30% of all equity hedge funds) with bullish Amazon positions at the end of June. Amazon’s AWS unit generated a total revenue of $10.8 billion during the second quarter with an annual growth rate of 29%. Stunning! Amazon’s cloud business is probably worth at least $500 billion as a stand alone company.

Qualivian Investment Partners recently released its Q2 2020 Investor Letter, a copy of which you can download here. Here is what they said:

“Amazon: AMZN shares, along with many other eCommerce participants, have been on a strong run this year, outperforming the S&P 500 materially since February. COVID is pulling forward years of eCommerce migration and AMZN is the big winner with a commanding share of key US and European markets – potentially even gaining share from an already dominant market position. Alongside this, cloud migration should continue to accelerate as the costbenefit of outsourcing to the cloud dominates in-hosting. Operating cash flow increased 42% last quarter to $51.2 billion for the trailing twelve months ended June 30, 2020. Amazon Web Services grew revenue at 29% last quarter and operating income grew by 58%. The internet infrastructure is effectively an oligopoly with AMZN as the biggest player. AMZN is currently trading at a price to operating cash flow ratio of 30X. This multiple does not incorporate the optionality that AMZN has as a dominant online and infrastructure platform. AMZN has multiple growth options going forward, some resulting from its enormous and hard to replicate advantage of free user data, together with the increasing application of artificial intelligence to that data. AMZNs competitive advantage is getting stronger. The key risks are regulatory and political.”