For the past couple of years, cloud computing has evolved into a flourishing area in the tech space. The significant opportunity in cloud computing has attracted many companies to build out cloud infrastructure and establish themselves as leading service providers. E-commerce giant Amazon.com Inc. (AMZN – Analyst Report) has emerged as a key player in the space with its Amazon Web Services (AWS).
Yesterday, AWS launched various new services including AWS Snowball, QuickSight, AWS Database Migration Service and Amazon RDS for MariaDB.
AWS Snowball is a shippable storage product, which is designed to let companies securely move huge amounts of data into and out of the AWS cloud very quickly without requiring high bandwidth to transfer it over the Internet. Each unit can store up to 50 terabytes (TB) of data.
Another service the company launched yesterday was QuickSight, which will help organizations in quickly analyzing their data and shipping large amounts of it for storage on AWS.
Apart from this, AWS introduced new database tools and services, AWS Database Migration Service and Amazon RDS for MariaDB. As per the company, these will “make it easier for enterprises to bring their production databases to AWS and break free from the cost and complexity of traditional commercial databases.”
To better serve its clients, the company is also working on enhancing its capabilities. AWS recently formed a new business group in collaboration with Accenture plc (ACN – Analyst Report), aimed at helping its clients to quickly move their business to the cloud.
According to Amazon, the Accenture AWS Business Group “will offer integrated consulting and technology solutions designed to help enterprise clients take greater advantage of the flexibility and economics of an “as-a-service” operating model where IT and business services are delivered on-demand, via the AWS Cloud.”
The exponential growth in the amount of data, complexity of data formats and the need to scale resources at regular intervals compelled several companies to turn to cloud computing vendors.
There is also an ongoing revolution in the way people use devices and communicate with each other, which is leading to the proliferation of mobile devices by consumers. The convenience and accessibility enabled by mobile is also driving employers across many sectors to move toward Bring-Your-Own-Device (BYOD). However, the nature of work differs across organizations and broader adoption of BYOD can only be possible through the utilization of cloud resources.
Before getting into the growth prospects, it might be helpful to understand what exactly cloud computing represents. So here goes-
Cloud computing consists of the entire gamut of computing intelligence required to carry out day-to-day operations by companies and professionals. This basically means that other than the hardware, which could be of any shape or form, all the supporting technology involved in creating, storing, retrieving, transporting, protecting, sorting, processing, analyzing and presenting information from multiple sources and formats, which when available from a shared (private) or public pool, could be referred to as cloud computing.
Cloud service providers therefore help organizations to store data and applications remotely in this pool, which can then be accessed from anywhere and at anytime via the Internet. Therefore, users have access to their files and settings from different devices and at all times.
Given its scope and advantages (cost, scaling, convenience, etc), it’s not surprising that the demand for cloud computing software and applications is on the rise. Cloud vendors usually offer the infrastructure or other technology as a service, which further reduces costs for adopters.
According to Centaur Partners, Software-as-a-Service (SaaS) and cloud-based business applications are likely to grow from $13.5 billion in 2013 to $32.8 billion in 2016, reflecting a compounded annual growth rate (CAGR) of 19.5%. Moreover, Computerworld forecasts that 42% of IT decision makers are planning to increase spending on cloud computing in 2015.
Another research firm, IDC projected last year that public IT cloud services spending will grow at a five-year CAGR of 22.8% to over $127 billion in 2018. The growth rate is six times higher than the broader IT market. In 2018, public IT cloud services will make up over 50% of the global software and storage development.
As mainstream adoption gathers steam, infrastructure has to be built out rapidly. It would therefore be more advantageous for leading vendors to collaborate or even merge their capabilities to capture a larger share of the pie.
Stocks to Watch Beyond Amazon
Undoubtedly, Amazon is the investors’ darling as it has a Growth Style Scores of ‘A’ and Zacks Rank #3 (Hold), but investors can also tap the high-flying cloud computing industry via a few more promising stocks.
The cloud computing space has several promising stocks to choose from. Here are some stocks which could be interesting long-term investment options for those interested in the space.
Juniper Networks, Inc. (JNPR – Analyst Report)
Juniper is a leading provider of networking solutions and communication devices. The company is set to capitalize on the growing demand for data center virtualization and cloud computing. The company reported better-than-expected second-quarter 2015 results and issued encouraging guidance for the third quarter, primarily due to rising cloud services related demand.
Juniper sports a Zacks Rank #1 (Strong Buy) with an expected long-term earnings growth of 11.5%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 18.4, which is lower than the industry average of 19.1. The company has a Growth Style Score and Value Style Score of ‘B’.
NetApp Inc. (NTAP – Analyst Report)
NetApp Inc., formerly Network Appliance, Inc., is a leading provider of innovative data management solutions that simplify the complexity of storing, managing, protecting, and retaining enterprise data. Market leaders around the world choose NetApp to help them reduce cost, minimize risk and adapt to the changing times and requirements.
The company currently sports a Zacks Rank #1 and has a Value Style Score of ‘B’. Its long-term EPS growth rate of 11% is more than the industry average growth rate of 9.9%.
Equinix Inc. (EQIX – Analyst Report)
Equinix designs, builds and operates neutral Internet Business Exchange centers where Internet businesses place their equipment and their network facilities in order to interconnect with each other. The neutral IBX centers provide content providers, application service providers and e-commerce companies with the ability to directly interconnect with a competitive choice of bandwidth providers, Internet service providers and site and performance management companies.
The company currently carries a Zacks Rank #2 (Buy) and has a long-term EPS growth rate of 17% which is more than double the industry average growth rate of 6.8%. The company has a Growth Style Score of ‘B’.
Wipro Ltd. (WIT – Snapshot Report)
Wipro Ltd. – ADR provides comprehensive IT solutions and services, including systems integration, Information Systems outsourcing, package implementation, software application development and maintenance, and research and development services to corporations globally. Wipro Limited is the first PCMM Level 5 and SEI CMM Level certified IT Services Company globally.
Wipro carries a Zacks Rank #2 and has an expected long-term earnings growth of 11.9%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 21, which is lower than the industry average of 34.3. The company has a Growth Style Score of ‘B’.
Red Hat Inc. (RHT – Snapshot Report)
Red Hat is a leading developer and provider of open source software and services, including the Red Hat Linux operating system. Unlike proprietary software, open source software has publicly available source code and can be copied, modified and distributed with minimal restrictions. The web site, REDHAT.COM, is a leading online source of information and news about open source software and one of the largest online communities of open source software users and developers.
The company currently carries a Zacks Rank #2 and has a long-term EPS growth rate of 15.8%, which is more than the industry average growth rate of 14.1%.
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Article source: http://www.zacks.com/stock/news/193011/beyond-amazon-aws-watch-these-5-cloud-computing-picks