3 cloud computing stocks to buy with explosive upside potential

Cloud computing is more than just using someone else’s computer. The ability for large teams to seamlessly collaborate, author and publish together has upended business workflows in a way few technologies have ever done before. No large modern company can even exist without cloud capabilities, and bigger companies are buying more and more cloud space for bigger and bigger ideas. Today we’re going to look at the top three cloud computing stocks to buy.

Over the past decade, the “Cloud Czars” have dominated the market. They brought along cloud-based business software for every occasion. Now, however, smaller, more agile cloud companies are making a breakthrough with specially curated clouds to meet the needs of their customers. It may be that the best high-potential cloud stocks are now the small ones that aren’t talked about as much. If you ignore them, you could miss out on major earnings.

Several underrated cloud companies are now building clouds that target a single market or industry. These products are looking to replace Cloud Czars’ clouds and could fragment the cloud market significantly as they gain market share.

It’s important to recognize that everyone’s cloud is not created equal, and one or the other can offer a distinct advantage that will greatly impact customers’ decision making. There is still a growing demand for cloud services tailored to customer needs instead of a one-size-fits-all approach. So, keep an eye out for these cloud stocks with great upside potential.

Oracle (ORCL)

Stock ORCL: A three dimensional Oracle sign in an outdoor setting

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Oracle (NYSE:ORCL) is still a small player in the cloud market, but it has room to grow. As the leading provider of cloud services to enterprise customers, Oracle shouldn’t be discounted among its biggest competitors. As a cloud stock, it has high potential and could prove even more agile in the long run.

Nearly two-thirds of Oracle’s revenue comes from cloud services, indicating its growing importance to the company. For EU customers, Oracle recently introduced EU Sovereign Cloud. This cloud will be located in EU data centers and managed by EU residents. Data will even be isolated from non-EU clouds. Oracle hopes to ensure that its Sovereign Cloud can comply with all EU data regulations and take market share from its competitors who flaunt them. With some of its competitors having recently come into conflict with EU laws, this could prove to be a very good bet.

Oracle’s latest annual report shows revenue increases of 18% and 22% on a constant currency basis to $50 billion. Net income increased nearly 27% to $8.5 billion.

Oracle’s cloud revenue is growing at an impressive rate, up about 50% in fiscal 2023, and the company’s focus on the EU market could drive further growth. Countries want to control their citizens’ data and are willing to use laws and regulations to do so. Cloud companies that can comply with such laws while still delivering high returns will have huge upside potential in the future. And that makes Oracle one of the best cloud computing stocks to buy.

Sales force (CRM)

miss the Salesforce (CRM) logo displayed on one of their towers in downtown San Francisco.  Salesforce layoffs

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Salesforce (NYSE:CRM) is a powerhouse in the cloud computing industry, offering an all-in-one solution to enable businesses to run their operations efficiently. Its full suite of cloud-based services power customer relationships, process management, and everything in between.

Stock Ticker CRM stands for customer relationship management, and it’s not just for show. Salesforce’s CRM platform is the core of its business model. Its cloud allows businesses to track every aspect of their operations, from purchasing and inventory management to order fulfillment, payment processing and customer satisfaction. Centralizing these functions on a single cloud is key to Salesforce’s success.

Salesforce is also moving forward with a new offering called AI Cloud. It will use machine learning and predictive analytics to provide insights and automate tasks. If AI applications truly are the next evolution in technology, Salesforce’s AI Cloud could be a big hit.

Salesforce’s fiscal 2023 annual report shows revenue growth but not profit growth. Revenues increased 18% and 22% on a constant currency basis to $31.4 billion, while net income decreased $1.4 billion to $208 million. Salesforce needs a more profitable way to make money, and AI Cloud could be the answer.

Salesforce is one of the oldest data center and cloud application companies in the industry. With over two decades in the software as a service (SaaS) industry, he has more experience than nearly any SaaS company out there. But it’s not based on his past victories. Instead, it’s moving forward to cutting-edge cloud services.

Adobe (ADBE)

Adobe (ADBE) Firefly website seen in an iPhone.  In March 2023, Adobe announced the beta launch of its new Firefly generative AI model.

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Adobe (NASDAQ:ADBE) is located at the intersection of technology and creativity. Its suite of cloud products remains the gold standard for creatives in every industry. And Adobe’s Creative Cloud provides a seamless experience by integrating all major software applications into one ecosystem. In this way, Adobe has quietly established itself as one of the best high-potential cloud stocks.

Adobe’s cloud allows users to design, edit and share. This has been a godsend for large art teams and has revolutionized the way creative projects are done. Not only that, Adobe is pushing the boundaries in art technology (or “art-tech” if you prefer). It added generative AI called Firefly to Adobe Photoshop. Between the cloud and AI, Adobe is perhaps the most dominant creative company you can buy.

Key to Adobe’s financial strength has been its revenue model. About 90% of its revenue comes from subscription-based software services. This gives Adobe predictable, recurring income. And that revenue has grown.

For the first quarter, Adobe reported a 9% year-over-year increase in revenue to $4.7 billion. Net income was about unchanged from a year earlier at $1.2 billion, but Adobe increased R&D spending 18% to $827 million. If this R&D spend can lead to more new offerings like Firefly, Adobe will continue to dominate the art cloud for years to come.

The bottom line is that Adobe is the go-to software source for all enterprise-grade art projects. And that makes it a cloud stock with great upside potential.

As of the date of publication, John Blankenhorn did not hold (directly or indirectly) any positions in the securities mentioned in this article. Opinions expressed in this article are those of the writer, subject to InvestorPlace.com posting guidelines.

John Blankenhorn is a neuroscientist at Emory University. He has significant experience in biochemistry, biotechnology and pharmaceutical research.

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