Cloud Stocks: What Tech Advisors Should Know Before Investing


The stock market is going through a revolution as lots of newer stocks are emerging. If you follow too much of the mainstream market, you probably haven’t heard of cloud stocks. However, those who keep a close eye on the stocks that are less-mainstream are familiar with cloud stocks.  

What Are Cloud Stocks?

Cloud stocks have been getting the attention of many tycoons & established investors for a while now. Things started to change after 2010.

Cloud stocks provide services to the cloud, own the cloud, or operate the cloud. Now you may ask, what actually is the cloud?

The cloud is a space that stores data and allows you to download it at your convenience. The cloud can be compared to a computing or data center, which controls data distribution on the internet. Cloud stocks have steadily gone up since the beginning of the internet.

With the advent of SaaS & TaaS, cloud stocks are only aiming to go higher. TaaS is heavily centered around the use of internet, cloud, and GIS. TaaS is also recognized as the upcoming revolution that will change the automotive industry.

Jeff Brown, an investment analyst discussed in length how TaaS, AI, and 5g is going to revolutionize the market and the world in the coming days. If that does happen then tech stocks and cloud stock are going to have great days.

To know more about Jeff Brownstones’ research, you can take a look at this TaaS article by StocksReviewed.

That said, let’s look at the types of cloud-based stocks & what they do.

Cloud Stock Types

These stocks are mainly of three types depending on their functions.

These functions include operating the cloud, providing service on the cloud & owning the cloud, these are as follows:-

a) Cloud Maintenance

It is the base of all cloud infrastructures. All the works required to get the cloud up & running fall into this category.

Companies maintaining Clouds provide hardware, tools, software & all other vital services to ensure its steady performance.

Some big names like DELL, Intel, etc. fall into this group. 

b) Cloud Czars

These stocks rightfully hold the name Czars because they handle a massive chunk of information.

They control the flow of information as the companies within this category are the largest data centers. They are in the driving seat of the internet. 

Giant corporations like Facebook, Google, Amazon, Microsoft, etc. fall into this category.

c) Cloud Service Providers

Cloud service provider companies deliver information & cloud computing services across the internet. Often these services come in the form of software.

What these companies are doing today was impossible a decade ago. The complete transformation of internet facilities has become possible because of the relentless hard work of these companies.

Today, some services have become entirely web-based as they rely primarily on the cloud for their business models. Companies like Netflix, Salesforce, etc. fall into this category.

Things to Consider Before Investing in Cloud Stocks

The background of these stocks may sound lucrative. There is enough reason to be excited because the cloud stocks went up to 200% since their first opening in 2011.

But you shouldn’t invest just by listening to this information. There are still plenty of other aspects to consider.

Long-Term Investment

The previous decade was the primitive stage of cloud stocks hitting their apex. Experts & analysts believe that cloud stocks will be the next big thing within the next decade. That said, investment in cloud stocks has to be based on the long-term.

If you are someone who’s looking to make a quick buck, then cloud stocks aren’t for you. Only the investors eyeing for the long haul should invest in the cloud stocks.

Again, lots of weak companies are present in the stock market. So, you need to be cautious before investing in any cloud stock. Therefore, a proper background check is of paramount importance.

Government Regulatory Threat

Not long ago the court called in the CEOs of Facebook & Google to testify. These czars hold the most power on the three types of cloud stocks. But by issuing by the court, there might be a potential break up or at least some additional regulations imposed by the government. Therefore, the stock values may not rise, like they used to do in recent years.

It poses a significant threat to the investors as stock values may decay during the long haul.

Surprisingly, cloud maintenance & service providers are not going through any scrutiny. That may give rise to lots of fake establishments along with the actual ones. So, you need to be extra careful there.

Which Cloud Stock You Should Invest?

It is difficult to answer this question directly. But we can give the guidance you need to decide for yourself. Two prominent sectors hold the substantial potential to be successful in the coming days.

These are mainly infrastructural & software-based companies.

Infrastructure

If you are looking for a comprehensive portfolio, this is the sector for you. This sector’s rapid improvement over the last decade has shown that it will continue to thrive in the coming decade.

Besides, these organizations are already the leading tech giants in the stock world. Companies such as Facebook, Microsoft, Google, Amazon, even Alibaba are the owners of these stocks. So, your portfolio will undoubtedly have value with the shares of such companies.

The hardware companies, namely, NVIDIA, Arista Networks, etc. are also the shareholders. So, reliability shouldn’t be an issue here.

Software

Software-based companies will also see an upward trajectory in their revenues. However, the unfavorable condition with the government may impact the prices of the shares.

Nevertheless, without proper background study, you shouldn’t invest in any company immediately.

Future of Cloud Stocks

According to the experts, the 2010 decade was the preparatory period for these stocks’ massive breakthrough. That means the upward trajectory of generating profits will keep on going in the next decade as well.

As the digitization process is going in full swing globally, the worldwide expense will rise by 13% in 2022 compared to 2013.

That said, lots of companies will mostly be dependent on cloud-based data storage & services.

Takeaway

This vast demand will cause an upward path for cloud stocks. No matter how lucrative all these data are, there’s no guarantee that you won’t lose your money in these shares. Even cloud stocks are volatile. So, before investing in any stock, judge wisely & then decide.

Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

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