The cloud industry is expected to grow at a compound annual growth rate of 14% through 2030, reaching $434 billion in 2022. The sector has exploded in recent years, fueled by hundreds of organizations adopting hybrid work methods in the midst of the COVID-19 epidemic. Meanwhile, improvements in artificial intelligence (AI) during the previous year gave the sector a boost.
Countless cloud providers hurried to offer AI capabilities on their platforms in order to fulfill rising demand. As a consequence, adding a cloud company to your portfolio is a good way to benefit from the market’s growth.
1. Amazon
It would be difficult to omit Amazon (NASDAQ: AMZN) in a discussion about cloud computing businesses. With Amazon Web Services, the retail behemoth has the world’s largest cloud platform, with $22 billion in revenues in the second quarter of 2023 and a 32% market share. The firm has become a go-to for enterprises looking for cloud services, with customers like Sony, Meta Platforms, Netflix, and others.
AWS is also rapidly boosting its AI capabilities. The corporation added numerous new capabilities to its expanding portfolio of services in June. Bedrock, a tool based on a language model similar to the one used by OpenAI’s ChatGPT, may assist users in developing generative programs such as chatbots.
2. Nvidia
Nvidia (NASDAQ: NVDA) has spent years as a prominent chipmaker powering the data centers that enable cloud computing. For over a decade, the business has worked with AWS as the platform’s top provider of graphics processing units (GPUs).
When investing in cloud companies, consider supporting all areas of the sector rather than just large brands like AWS or Microsoft’s Azure. Chips are critical to the industry, and Nvidia is one of the largest players.
Furthermore, Nvidia has reaped enormous benefits from the AI growth. The company’s GPUs are the most powerful on the market, and demand is increasing as several cloud platforms expand their AI capabilities. Nvidia’s revenue increased 101% year over year in fiscal Q2 2024 (ended July 30, 2023), mostly due to a 170% rise in revenues from data centers.
3. Advanced Micro Devices
Advanced Micro Devices (NASDAQ: AMD), like Nvidia, reaped significant benefits from the growing cloud sector. The firm has profitable ties with Microsoft and Alphabet, supplying hardware to their respective cloud services. AMD’s data center sales increased 64% year on year in fiscal 2022, reaching $6 billion.
This year, the business has been working on processors to compete with Nvidia’s AI products. In June, AMD revealed the MI300x, which it claims would be its most powerful GPU to date. The new chip is promising since cloud companies are yearning for stronger market competition, as it would reduce the cost of GPUs.
As a consequence, AMD’s AI chip growth enjoys widespread market backing. Indeed, Microsoft is said to be offering financial and technical help to the startup as it works to establish a competitor to Nvidia.