Time for Cloud ETFs on Earnings Strength & Promising Growth?

Sanghamitra Saha

17 May 2024 at 8:00 am·3-min read

Cloud computing has been at the forefront of the growth in technology for the past few years, offering efficient solutions for businesses and consumers. The global cloud computing market is expected to grow from $626.4 billion in 2023 to $1.27 billion by 2028 at a CAGR of 15.1%, per MarketsandMarkets.

The widespread adoption of remote work and e-commerce has continued to fuel the need for scalable and reliable cloud solutions. Moreover, advancements in cloud technologies, including artificial intelligence (AI), machine learning (ML), and cybersecurity enhancements, have expanded the use cases for cloud services, attracting a broader customer base.

The global cloud computing market is led by three mega cloud service providers — Microsoft, Google Cloud and Amazon Web Services. The total cloud infrastructure market was worth $76 billion worldwide at the end of Q1 of 2024, which marked a year-over-year rise of 21%.

According to recent data from Synergy Research Group cited on CRN, AWS, Microsoft and Google collectively managed a 67% share of the $76 billion global cloud infrastructure services market in the first quarter of 2024.

Google-parent Alphabet GOOGL, Microsoft MSFT and Amazon AMZN recently reported their quarterly financial cloud numbers for the first quarter of 2024. Each company logged record quarterly cloud sales thanks to double-digit growth rates.

Inside Mega Cloud’s Size in Q1

Combined, these three cloud leaders generated more than $61 billion in total sales in the first quarter of 2024. Their cloud units, in fact, boosted total revenue growth as clients are increasingly adopting AI services. Growth rates are rebounding from the relative lows seen through most of 2023.

Individually, Microsoft’s Intelligent Cloud business generated $26.7 billion in total sales (up 21% year over year) during the quarter, meaning Microsoft’s cloud group now has a run rate of $107 billion.

AWS generated just over $25 billion in revenues (up 17% year over year). This means Amazon’s cloud business now has an annual run rate of $100 billion.

Google Cloud reported total sales of $9.6 billion (up 28% year over year). This shows that Alphabet’s cloud business currently has an annual run rate of $38.4 billion.

In terms of global market share, AWS is leading (with a 31% share), followed by Microsoft (25%) and Google (11%). Other cloud market-share leaders of the first quarter included Alibaba BABA at 4% market share and Salesforce CRM at 3% cloud share.

Other Companies’ Soaring Cloud Demand

Alibaba’s revenues from Cloud Intelligence Group grew 3% year over yeardespite slashing prices in the first quarter. Like Alibaba, Baidu BIDU also came up with upbeat results thanks to the boom in AI Cloud revenue. Baidu’s AI Cloud Group revenues grew by 12% year over year, driven by generative AI and foundation models, which Baidu looks to strengthen further.

Promising Growth in 2024

According to Gartner Forecasts, global end-user spending on public cloud services is forecast will grow 20.4% to $678.8 billion in 2024, up from $563.6 billion in 2023. All segments of the cloud market are expected to see growth in 2024. Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2024 at 26.6%, followed by platform-as-a-service (PaaS) at 21.5%.

ETFs in Focus

Wisdomtree Cloud Computing Fund WCLD, Global X Cloud Computing ETF CLOU, Amplify Global Cloud Technology ETF IVES, Fidelity Cloud Computing ETF FCLD and Cloud Computing ETF First Trust SKYY are some of the ETFs that can be played on the boom. All these ETFs have gained in the range of 4% to 5% in the past week.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Salesforce Inc. (CRM) : Free Stock Analysis Report

Baidu, Inc. (BIDU) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report

First Trust Cloud Computing ETF (SKYY): ETF Research Reports

Global X Cloud Computing ETF (CLOU): ETF Research Reports

WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports

Amplify Global Cloud Technology ETF (IVES): ETF Research Reports

Fidelity Cloud Computing ETF (FCLD): ETF Research Reports

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Time for Cloud ETFs on Earnings Strength & Promising Growth?

Inside Mega Cloud’s Size in Q1

Other Companies’ Soaring Cloud Demand

Promising Growth in 2024

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