As enterprises rapidly reinvent themselves to survive in the pronounced digital ecosystem of the present, cloud computing is one such cornucopia that has become an inseparable ingredient for modern business operations. For an investor, knowing who the important players are in this world can help you to make better decisions about which companies should be included or excluded from your portfolio. In this article, we will touch on some of the best SaaS (Software as a Service) and IaaS (Infrastructure as a Service) providers within their respective markets.
The Cloud Computing Landscape
With that out of the way, let’s get to know it better by disentangling Saas from Iaas.
Infrastructure as a Service (IaaS): These companies provide virtual servers and data storage over the Internet to remove the need for on-premises server rooms.
Infrastructure as a Service (IaaS): IasS providers rent virtualized resources such as servers, storage, and networking offered over the internet.
These are two of the fastest-growing fields in recent history due to a surge in remote work solutions, digital transformation projects, and the need for cost-effective scalable IT infrastructure.
Top SaaS Providers
1. Salesforce (CRM)
Salesforce: Leader in CRM solutions and a true SaaS originator. Key points for investors:
#4: Open Source CRM Solutions Market Leader
Product: Sales Cloud, Service Cloud, Marketing Cloud Product Products
Salesforce — very AI-centric with its Einstein platform
Sustained revenue growth and smart acquisitions (like the one with Slack)
2. Adobe (ADBE)
Adobe has made the successful transition from a software company to a SaaS powerhouse. Consider these factors:
Leadership Position in Creative Software (Photoshop, Illustrator, etc.)
Adobe Experience Cloud to boost digital marketing capabilities
Interesting in terms of new business model: Subscription revenue stream selling Creative Cloud subscriptions
Proven record of strong financial performance and cash flow generation
3. Zoom Video Communications (ZM)
Although Zoom boomed during the coronavirus outbreak, still it is a major player in video communication.
An easy-to-use platform for video conferencing and real-time collaboration
Evolving Product Offerings, Including Zoom Phone and Zoom Rooms
Enterprise customer base expansion
Some more room for the hybrid workers to fill out
Top IaaS Providers
1. Amazon Web Services (AMZN)
The IaaS market leader is Amazon’s cloud computing arm, AWS.
World-leading infrastructure and a variety of services
Diverse customer base in multiple industries
Key innovations in machine learning and edge computing
A big contributor to Amazon’s profit as a whole
2. Microsoft Azure (MSFT)
The following graph shows that Microsoft is growing 10% faster than Amazon in the cloud platform space.
In tapping into Microsoft’s existing relationships with enterprise customers
Native integration with top Microsoft products (Office 365 for Example)
Emphasis on Hybrid Cloud Solutions
Riding the broad Microsoft cloud credit ramp.
3. Google Cloud Platform (GOOGL)
Google Cloud is still far behind AWS and Azure, but also gaining ground:
There is an extensive amount of data analytics and machine learning that Google can leverage
So a strong play in terms of containerization and Kubernetes.
Competitive pricing tactics to attract customers
Synergies with Google’s other products and services
Emerging Players to Watch
In the ever-evolving cloud computing market, these new kids on the block should be watched:
SNOW (Snowflake Inc) is a cloud-based data warehousing company and has been one of the hottest movers since its IPO.
Twilio (TWLO): A cloud communications platform that provides tools and software for developers to embed voice, internet messaging, and video into their applications.
DigitalOcean (DOCN): Cloud infrastructure tailored for small to medium-sized businesses, focusing on simplicity and ease of use.
Investment Considerations
What to Keep in Mind When Looking at Cloud Computing Companies for Your Portfolio
Market Position: Also look for companies that have a good market share and competitive advantage.
Potential For Growth: Evaluate the company’s growth track record and its potential to gain from a secular increase in cloud spending.
Long-term growth potential: Examine financial health like revenue, profitability, and cash flow metrics.
Innovation: Evaluate the company’s innovation and ability to adapt to changes in technology trends.
Customer Base: An expanding and varied customer base is a sign of potential long-term stability and growth.
Conclusion
This Cloud Computing segment of the industry has the potential for lot many investments both in the SaaS and IAAS sectors. Top 10 companies are known to all with Salesforce, Amazon Microsoft leading the pack while newer startups like TR over ServiceNow are announcing their arrival. As with all investment decisions, always do your research and consider what your current financial situation is before adding these stocks to your portfolio.
Keep in mind that cloud computing is a changing landscape and has had rapid growth. Keep up to date on new trends, technology, and regulation changes that might affect these companies as well as the broader market. Doing so will leave you better prepared to make educated decisions when investing in this up-and-coming sector of the market.