Cloud computing stocks and ETFs are making credible claims to being some of the star assets during the coronavirus. That Global X Cloud Computing ETF (Nasdaq: CLOU), which has recently been hitting a series of all-time highs.
The cloud computing industry refers to companies that (i) license and deliver software over the internet on a subscription basis (SaaS), (ii) provide a platform for creating software applications which are delivered over the internet (PaaS), (iii) provide virtualized computing infrastructure over the internet (IaaS), (iv) own and manage facilities customers use to store data and servers, including data center Real Estate Investment Trusts (REITs), and/or (v) manufacture or distribution infrastructure and/or hardware components used in cloud and edge computing activities.
“Because of the coronavirus pandemic — cloud services can provide convenient and potentially less expensive alternatives. Investors have been rewarding these companies for their recent gains, but the trend may not continue as people return to school and work,” reports CNBC.
Beyond COVID-19
There’s no denying that CLOU and plenty of its components are getting a coronavirus lift.
“Zoom, the video calling software provider that is arguably one of the biggest beneficiaries of the coronavirus pandemic, is part of the index; its stock is up 154% for the year. E-commerce technology provider Shopify, also there, is up 101%,” according to CNBC.
Important to the CLOU thesis is that cloud computing is rapidly growing, was doing so prior to the pandemic and will continue doing so after the virus is quashed.
Declining costs in cloud adoption and increasing ease of use are among the factors driving the cloud computing boom. Several of CLOU’s marquee components have first-mover advantages in various cloud niches and are building attractive competitive moats in the space. CLOU’s IaaS exposure should beneficial to long-term investors.
The increasingly digital and connected world that forms the backdrop for CLOU’s launch is exhibiting significant growth and is expected to continue to grow over the coming years. The cloud computing industry that was estimated to be worth $188 billion in 2018 is expected to be worth over $300 billion by 2022, a nearly 15% annualized growth rate. IaaS is a major contributor to that growth.
Data confirm investors are displaying enthusiasm for cloud ETFs. Year-to-date, investors allocated nearly $75.1 million to CLOU.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.