In this piece, we discuss the 9 Best Cloud Stocks to Buy as Azure Growth Hits 40%.

The numbers behind the recent cloud infrastructure boom are impossible to ignore.

On April 30, all three top cloud providers, AWS, Microsoft Azure, and Google Cloud, surpassed analyst estimates, with Azure posting 40% growth and Google Cloud delivering its fastest-ever quarterly expansion of 63% to $20.03 billion.

Combined, cloud infrastructure spending hit $129 billion in the quarter alone, per Synergy Research.

The underlying growth catalyst remains artificial intelligence (AI), with demand outpacing supply.

Amazon CEO Andy Jassy noted that AWS customer spending on its Bedrock AI platform jumped 170% quarter over quarter. Microsoft CEO Satya Nadella mentioned that customers adopting Anthropic and OpenAI models through Azure doubled in a single quarter. Alphabet’s Sundar Pichai noted that revenue from products built on Google’s generative AI models surged 800%.

Meanwhile, capital spending plans appear staggering.

The four tech giants, Alphabet, Amazon, Microsoft, and Meta, are collectively on track to exceed $700 billion in capital expenditure this year, up from roughly $600 billion previously, Reuters reported on May 11. Amazon alone has committed approximately $200 billion.

More importantly for investors, the buildout is pulling in players beyond Big Tech.

Nebius Group, a neocloud provider serving Meta and Microsoft, reported an eightfold revenue jump on May 13 and raised its annual capex forecast to $20-$25 billion. Separately, Reuters reported on May 8 that Anthropic signed a $1.8 billion computing deal with Akamai Technologies.

What that essentially means is that the race for AI infrastructure is intensifying across the entire cloud ecosystem.

With that backdrop, let’s now dive into our list of the best cloud stocks to buy as Azure growth hits 40%.

Our Methodology

For this article, we scanned across the financial media and screeners to identify stocks with a strong connection to cloud software, cloud infrastructure, SaaS, developer platforms, or cloud-native enterprise services. We narrowed that list by focusing on stocks with an upside potential greater than 15% and a significant hedge fund interest. We also incorporated short-seller sentiment and ranked the final list in descending order by short float percentage.

Note: All data sourced on May 16, 2026.

Why are we interested in the stocks that hedge funds pile into? 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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

9. Snowflake Inc. (NYSE:SNOW)

Number of Hedge Fund Holders: 90

Snowflake Inc. (NYSE:SNOW), featuring a short float of 5.18% and upside potential of 52.60%, earns a spot on our list of the best cloud stocks to buy as Azure growth hits 40%.

On May 15, 2026, RBC Capital lowered its price target on Snowflake Inc. (NYSE:SNOW) to $220 from $245 while keeping an “Outperform” rating, as part of a broader research note previewing Q1 results across software names. The firm flagged a tricky but favorable setup, with Q1 upside likely given strong checks and ramping Cortex Code adoption that could result in no deceleration to modest acceleration in product revenue.

That analyst optimism is supported by the company’s FY27 outlook, issued alongside its most recent earnings.

Management guided Q1 product revenue of $1.262 billion to $1.267 billion, representing 27% year-over-year growth. For the full year, Snowflake Inc. (NYSE:SNOW) expects product revenue of approximately $5.66 billion, also reflecting 27% year-over-year growth, with the Observe acquisition contributing approximately 1 percentage point of that growth. Management guided FY27 non-GAAP product gross margin of 75%, non-GAAP operating margin of 12.5%, and non-GAAP adjusted free cash flow margin of 23%, the latter carrying an approximate 150 basis point headwind tied to the acquisition.

Meanwhile, Snowflake Inc. (NYSE:SNOW) deployed more than 430 product capabilities to market during FY26, with management citing continued strength in its core business and further growth in AI workloads as the basis for its outlook. The company ended the Q4 FY26 quarter with $4.8 billion in cash, cash equivalents, and short- and long-term investments combined, with $1.1 billion remaining under its repurchase authorization.

Snowflake Inc. (NYSE:SNOW) provides a cloud-based data platform that helps organizations store, manage, and share data across multiple public clouds. Its platform, called the Snowflake Data Cloud, supports diverse workloads including data engineering, analytics, machine learning, and secure collaboration.

8. Okta, Inc. (NASDAQ:OKTA)

Number of Hedge Fund Holders: 53

Okta, Inc. (NASDAQ:OKTA), featuring a short float of 5.03% and upside potential of 21.50%, earns a spot on our list of the best cloud stocks to buy as Azure growth hits 40%.

On May 14, 2026, Barclays raised its price target on Okta, Inc. (NASDAQ:OKTA) to $93 from $90 while keeping an “Overweight” rating ahead of the company’s May 28 earnings report. The firm said Okta could raise its fiscal 2027 guidance, citing improved demand and execution.

That update followed Barclays’ earlier upgrade of Okta, Inc. (NASDAQ:OKTA) to “Overweight” from “Equal Weight,” when it lifted its price target to $90 from $85.

The firm pointed to its chief investment officer survey, which showed identity moving to the top spending priority within security. Barclays also said Okta, Inc. (NASDAQ:OKTA)’s standing was “improving steadily as a vendor expected to see increased spending,” citing the company’s broad exposure to the large identity market, including fast-growing sub-segments. The stock is up 25% over the past month.

In March, D.A. Davidson had analyzed the company’s Q4 results, saying the quarter and outlook were mostly in line with expectations. Additionally, it highlighted the current remaining performance obligations growth of 12% year-over-year, ahead of 9% consensus. The firm reiterated a “Buy” rating on Okta, Inc. (NASDAQ:OKTA) and set a $110 price target.

D.A. Davidson also pointed to fiscal 2027 subscription revenue guidance of about 10% growth, above 9% consensus, and said the outlook implied more stable subscription growth through the year than previous forecasts. The firm continued to view management’s guidance as conservative, citing improved sales productivity, increased sales capacity, improved product mix, larger deal sizes, and early AI agent contributions.

Okta, Inc. (NASDAQ:OKTA) is an identity partner operating in the United States and around the world. The company offers Single Sign-on,  Adaptive MFA, API Access Management, Access Gateway, Okta Device Access, and Universal Directory. It was founded in 2009 and is based in San Francisco, California.