In this day and age, where generative artificial intelligence (AI) technologies are all the craze, cloud computing is even more important than ever. Large-language models (LLMs), which power the new generative AIs, require advanced computing chips as well as high-powered servers.
Investors looking to enter this for the first time can always take a look at which stocks Wall Street is optimistic about. Below are three strong buy cloud computing stock with strong buy ratings from various Wall Street firms.
Strong Buy Cloud Computing Stocks: Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has been a cloud computing key player, but the company wasn’t always successful. Microsoft Azure and Amazon Web Services enjoyed better market share and higher margins. However, recent growth in Google Cloud should keep investors engaged. Google Cloud, which now hosts much of the tech giant’s AI products, reported a record profit the first quarter of fiscal year 2024. In fact, the cloud unit’s operating profit nearly quintupled year-over-year to $900 million, signaling to investors all the capital Alphabet has put into its cloud service seems to finally be paying off.
The earlier in the year, Google Cloud announced Vertex AI, which is a no-code product that helps businesses to create AI agents for their own systems. More products like these will drive Google Cloud revenue and profits for years to come. Alphabet trades at discount to most of its Big Tech competitors, so that coupled with Alphabet’s recent strides in AI technology development make it obvious why Wall Street is pretty optimistic about the stock.
GOOG has garnered 15 “Strong Buy” ratings from Wall Street firms and 33 “Buy” ratings.
Microsoft (MSFT)
Another cloud computing stock with a sizable platform is Microsoft (NASDAQ:MSFT). In fact, if we’re just observing revenue figures, Microsoft’s “Intelligent Cloud” generated $26.7 billion for the first three months of 2024. Coming in second place was AWS, which had reported $25 billion in quarterly revenue.
Microsoft Azure’s growth has been undergirded by its strength in AI services. According to CNBC, 7 percentage points of Azure growth were related to AI, which had been up from 6 points of impact in the company’s prior quarter. Moreover, Microsoft chief financial officer (CFO) Amy Hood mentioned, “Currently, near-term AI demand is a bit higher than our available capacity,” which has prompted Microsoft to earmark billions for server-related capital expenditures.
Due to its reach in cloud services and AI, Microsoft has 13 “Strong Buy” ratings from Wall Street firms and 41 “Buy” ratings.
Nvidia (NVDA)
It’s difficult to speak about cloud computing without mentioning the chipmaker responsible for making the technology work the way it does. Nvidia (NASDAQ:NVDA) has been on a tear recently. Over the past 12 months, the chipmaker’s share price has skyrocketed 217.7%. Much of the share price growth is related to Nvidia’s supremacy in developing AI chips as well as the company’s critical role in AI cloud computing services.
When speaking about Microsoft Azure on an earnings call, Microsoft CEO Satya Nadella highlighted, “[Azure offers] the most diverse selection of AI accelerators, including the latest from NVIDIA, AMD, as well as our own first-party silicon.” Google Cloud and AWS have also taken advantage of Nvidia’s high-end GPUs to power complex LLM models on their cloud servers. In March, Nvidia announced a new series of chips called “Blackwell,” and these will power the next generation of advanced AI models.
Nvidia has 9 “Strong Buy” ratings and 42 “Buy” ratings from Wall Street firms.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.