In this article, we will list the 5 Best Cloud Stocks to Buy as Azure Growth Hits 40%. Please visit 9 Best Cloud Stocks to Buy as Azure Growth Hits 40% if you’d like to see an extended list and the methodology behind it.
5. Dynatrace, Inc. (NYSE:DT)
Number of Hedge Fund Holders: 53
Dynatrace, Inc. (NYSE:DT), featuring a short float of 3.81% and upside potential of 21.20%, earns a spot on our list of the best cloud stocks to buy as Azure growth hits 40%.
Dynatrace, Inc. (NYSE:DT)’s May 15, 2026, fourth-quarter results surpassed analysts’ revenue and earnings estimates. However, investors do not appear to be focused on that.
On May 13, 2026, Wedbush cut its price target to $48 from $55 while keeping an “Outperform” rating, noting the beats would likely be overshadowed by a lighter-than-expected near-term guide and margin pressure.
Annual recurring revenue also came in above the company’s own guidance but fell short of Street whisper numbers. That comparison became harder following Datadog’s strong results the prior week. Nevertheless, Wedbush maintained that Dynatrace, Inc. (NYSE:DT) remains well-positioned in the software landscape, with AI and cloud complexity creating demand for observability as organizations manage increasingly agentic workloads.
That long-term view received a high-profile endorsement in late April 2026.
Reuters reported that Starboard Value disclosed a “substantial” stake in Dynatrace, Inc. (NYSE:DT). The hedge fund called Dynatrace undervalued, projecting at least 500 basis points of margin expansion by fiscal 2029, a $75 million annual reduction in sales and marketing costs, and aggressive deployment of its $1 billion buyback authorization, with the potential to repurchase $2.5 billion in shares over three years.
Starboard argued the market has wrongly grouped Dynatrace, Inc. (NYSE:DT) with AI-disruption casualties, contending that rising cloud and agentic complexity should actually accelerate its growth. The stock is down roughly 10% this year and trades at nearly half the valuation multiple of infrastructure software peers.
Management guided fiscal 2027 ARR of $2.38 billion to $2.40 billion, implying growth of 15.5% to 16.5%, with net new ARR of $320 million to $340 million, accelerating from fiscal 2026 levels. Total revenue is expected to be between $2.32 billion and $2.34 billion, with subscription revenue of $2.22 billion to $2.24 billion, both growing 14% to 15%.
Dynatrace, Inc. (NYSE:DT) is a technology company that advances observability for digital businesses and primarily operates an AI-powered observability platform called Dynatrace.
4. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 70
With a short float of 2.71% and upside potential of 21.60%, Cloudflare, Inc. (NYSE:NET) earns a place on our list of the best cloud stocks to buy as Azure growth hits 40%.
Cloudflare, Inc. (NYSE:NET)’s first-quarter results came in ahead of expectations, but the market’s reaction told a mixed story.
Cloudflare, Inc. (NYSE:NET) had climbed over 30% YTD heading into earnings but pulled back more than 23% since Q1 results on May 7, settling at $197.56 on May 15, 2026. Despite that move, roughly 25 of 37 covering analysts remain bullish on the shares.
On May 8, 2026, Bernstein cut its price target to $136 from $146, keeping a “Market Perform” rating, and said the quarter essentially delivered a growth rate consistent with the fourth quarter rather than the acceleration some had hoped for following strong results at AWS and Datadog. Net revenue retention fell to 118%, and while the beat relative to guidance was normal, Bernstein kept a more measured tone.
Susquehanna saw it differently.
On May 11, 2026, analyst Shyam Patil raised the firm’s price target to $200 from $190, maintaining a “Neutral” rating, and described the quarter as a fine one, with strength particularly visible among large customers.
Patil also noted Cloudflare, Inc. (NYSE:NET)’s announcement of a significant headcount reduction as it pivots toward an AI-first operating structure aimed at driving efficiency and productivity, and flagged the more conservative second-quarter guidance as prudent rather than alarming.
The company’s first-quarter revenue came in at $639.8 million, well ahead of the $621.9 million estimate, with adjusted earnings of 25 cents per share, beating the 23-cent consensus. Second-quarter revenue was guided at $664 million to $665 million, just below the $665.3 million Wall Street estimate, and adjusted earnings are expected at 27 cents per share .
Cloudflare, Inc. (NYSE:NET) is a leading connectivity cloud company that specializes in improving the security, performance, and reliability of websites and applications.
3. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 111
Oracle Corporation (NYSE:ORCL), featuring a short float of 1.83% and upside potential of 21.40%, earns a spot on our list of the best cloud stocks to buy as Azure growth hits 40%.
Analysts appear convinced that the market is misreading the company’s AI infrastructure story.
On May 13, 2026, Wedbush raised its price target on Oracle Corporation (NYSE:ORCL) to $275 from $225, keeping an “Outperform” rating, and said its confidence in Oracle’s strategic positioning within the AI infrastructure landscape had grown following recent checks.
The firm’s core argument is that investors are fixating on the optics of Oracle’s heavy, contract-backed capital spending cycle while underweighting the demand visibility sitting behind it. Wedbush added that its comfort with Oracle’s relationship with OpenAI is increasing and that fears surrounding the broader data center story remain overdone.
A day earlier, on May 12, 2026, Oppenheimer’s Brian Schwartz raised the firm’s price target to $235 from $210, also kept an “Outperform” rating, and reiterated Oracle Corporation (NYSE:ORCL) as the firm’s top pick.
Schwartz pointed to strong technology infrastructure spending visible in the recent quarterly results of Oracle’s largest customers, partners, and suppliers, along with a significant restructuring announced on March 31, as reasons to expect upside in Oracle’s fourth-quarter 2026 results. The firm also sees solid bookings growth ahead from OpenAI, Meta, Nvidia, federal government commitments, and Microsoft outsourcing lower-margin training workloads to Oracle Corporation (NYSE:ORCL).
That optimism follows a solid foundation laid in the latest quarter.
In March 2026, Oracle Corporation (NYSE:ORCL) reported third-quarter remaining performance obligations of $553 billion, up 325% year-over-year and ahead of estimates, reflecting the scale of AI contracts the company has secured.
Oracle Corporation (NYSE:ORCL) also raised its fiscal 2027 revenue forecast to $90 billion, above the $86.6 billion analyst consensus at the time.
Oracle Corporation (NYSE:ORCL) provides information technology-related products and services to enterprises through its main business segments: Cloud and License, Hardware, and Services. The company is based in Austin, Texas and was founded on June 1977 by Lawrence Joseph Ellison, Robert Nimrod Miner, and Edward A. Oates.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 312
With a short float of 1.08% and upside potential of 36.80%, Microsoft Corporation (NASDAQ:MSFT) earns a place on our list of the best cloud stocks to buy as Azure growth hits 40%.
Microsoft Corporation (NASDAQ:MSFT)’s restructured OpenAI partnership raised concern among investors, with the stock down roughly 15% so far this year. However, not everyone saw the restructuring through a bearish lens.
On May 13, 2026, Wedbush analyst Daniel Ives stood behind Microsoft Corporation (NASDAQ:MSFT) with an “Outperform” rating and a $575 price target, viewing the revised deal as a net positive rather than the strategic failure the market appears to be treating it as.
Under the restructuring, OpenAI’s revenue share to Microsoft Corporation (NASDAQ:MSFT) is now capped at $38 billion through 2030, a reduction from the previous arrangement. However, the removal of OpenAI’s prior option to defer payments to 2032 means Microsoft actually receives more in the near term, approximately $6 billion this year, versus the $4 billion previously expected.
The analyst cited other key tailwinds: IP rights to OpenAI’s models are locked in through 2032, Microsoft Corporation (NASDAQ:MSFT) stays on as OpenAI’s primary cloud provider, the equity stake survives into what could be a significant IPO, and the revenue-sharing requirement on Azure sales of OpenAI models is dropped entirely.
Bill Ackman read the situation similarly, stating:
“We view Microsoft’s recent decision to restructure its OpenAI partnership not as a concession but as part of a deliberate pivot toward a more open, multi-model architecture that better serves enterprise customers.”
The underlying business momentum reinforced both views.
On April 29, 2026, Microsoft Corporation (NASDAQ:MSFT) reported fiscal third-quarter 2026 revenue of $82.9 billion, up 18% year-over-year, with Azure and cloud services up 40% and total cloud revenue climbing 29% to $54.5 billion. The AI segment crossed a $37 billion annualized revenue run rate.
Looking ahead, fourth-quarter Azure growth is guided at 39%-40% in constant currency, ahead of the 36.7% consensus.
Microsoft Corporation (NASDAQ:MSFT) is a global technology company that develops and sells a wide range of software, cloud services, devices, and business solutions, serving both individual users and enterprise customers worldwide. Its flagship products include Windows, Microsoft 365, Azure, LinkedIn, and Xbox.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 381
Amazon.com, Inc. (NASDAQ:AMZN), featuring a short float of 0.93% and upside potential of 17.90%, earns a spot on our list of the best cloud stocks to buy as Azure growth hits 40%.
AWS grew 28% year-over-year to $37.6 billion in the first quarter of 2026, well ahead of the 25% analysts had forecasted. Consolidated net sales reached $181.5 billion, while second-quarter guidance came in at $194 to $199 billion in net sales, comfortably above the $188.9 billion consensus.
Management also reaffirmed its $200 billion AI capital investment target for the year, offering investors a degree of certainty amid an industrywide escalation in data center spending.
At the same time, Amazon.com, Inc. (NASDAQ:AMZN)’s latest partnership moves were hard to ignore.
Amazon.com, Inc. (NASDAQ:AMZN) brought OpenAI’s latest models and its Codex coding agent onto AWS, then committed up to $25 billion to Anthropic, with Anthropic pledging more than $100 billion in AWS expenditure over the next decade. AI services on the platform are already generating over $15 billion in annualized revenue.
Wall Street took notice of that backdrop: on April 30, 2026, TD Cowen raised its price target to $350 from $300 and lifted its revenue forecasts post-earnings; Goldman Sachs moved to $325 from $275, with the analyst flagging a sharply rising backlog as the more significant indicator of where AWS growth is headed; Raymond James went to $280 from $225, making the case that the AI partnership structure and expanding agentic capabilities position AWS as the platform enterprises will build on for years.
All three kept Buy-equivalent ratings on Amazon.com, Inc. (NASDAQ:AMZN).
Amazon.com, Inc. (NASDAQ:AMZN) operates across e-commerce, digital content, advertising, and cloud computing. Its online and offline stores offer both in-house and third-party products, while its Amazon Web Services (AWS) division runs one of the world’s largest data center networks.
While we acknowledge the potential of AMZN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMZN and that has 100x upside potential, check out our report about the cheapest AI stock.
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