As the Pentagon mulls over its massive cloud computing project, investors can join in with funds like the Global X Cloud Computing ETF (CLOU).

The Pentagon is mired in a legal battle with Amazon Web Services regarding its cloud computing project dubbed “JEDI.” The contract was ultimately awarded to Microsoft, but Amazon asserts it got snubbed due to political influences.

“We are going to have to assess where we are in regards to the ongoing litigation and determine what the best path forward is for the department,” said deputy Pentagon press secretary Jamal Brown in a Seattle Times article.

Whatever the Pentagon decides to do, there’s no denying the need for cloud computing. The space has seen exponential growth during the pandemic amid social distancing measures.

Cloud computing services can allow businesses to run portions or all of their operations solely on the internet. It allows companies to be more dynamic and access essential services from anywhere.

The Pentagon is well aware of the benefits of cloud computing. What they decide to do from here remains the big question mark, but it will eventually involve some form of cloud computing.

“So for all of those reasons, moving to a cloud architecture is going to be vital to how we innovate in this department and we’re going to have to assess where we are with regard to the ongoing litigation around JEDI and determine what the best path forward is for the department,” Hicks said on April 30th.

CLOU seeks to track the Indxx Global Cloud Computing Index. The fund holds a basket of companies that stand to benefit from the continuing proliferation of cloud computing technology and services.

CLOU Chart

A Balanced Portfolio

Rather than lean heavily on Microsoft or Amazon, CLOU offers a variety of companies that operate in the cloud computing space. This gives CLOU a balanced portfolio sans the concentration risk.

“Part of the Global X suite of niche thematic ETFs, the index methodology attempts to keep giants like Microsoft and Amazon from swamping the portfolio,” an ETF Database analysis said. “To gain entry into the benchmark, companies must get at least half their revenue from these businesses. There’s an exception for firms that earn more than $500 million from cloud computing, but those stocks are limited to a combined 10 percent of the portfolio. CLOU’s top holdings include Zscaler, Akamai and Netflix.”

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