MENU

3 top tech shares exposed to the cloud computing boom

During the most recent earnings season in the United States several tech giants reported impressive earnings growth.

For at least two of these, Amazon and Microsoft, one key catalyst of this growth was the performance of their cloud businesses.

During the first quarter Amazon’s cloud business delivered a 49% increase in segment revenue compared to the prior corresponding period to US$5.44 billion. Whereas Microsoft’s Azure cloud business performed even better and saw revenue rise 93% on the prior corresponding period.

I believe these results demonstrate why there is so much hype around cloud computing right now.

But it isn’t just Amazon and Microsoft that stand to benefit. The three Australian shares below are also likely to profit from this powerful trend. Here’s why:

Macquarie Telecom Group Ltd (ASX: MAQ)

I think that Macquarie Telecom is one of the best options in the mid cap space right now thanks to its Hosting (cloud services) segment. Strong demand for its cloud services meant that in February the segment delivered a 30% increase in half-year profit. This means it now accounts for 60% of the company’s EBITDA.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elasticity connectivity and network services. What this essentially means is that it uses software to streamline the internet connection between its customers’ data centres and major cloud service providers. One broker that likes what it sees is UBS. Yesterday it initiated coverage on Megaport with a buy rating and sizeable $5.20 price target.

NEXTDC Ltd (ASX: NXT)

As one of the world’s leading data centre operators I believe NEXTDC is well positioned to profit from the seismic shift to the cloud. Unfortunately, though, I’m not the only one to think this. Investors have been piling in to buy NEXTDC shares this year, sending its share price hurtling higher. While I remain confident that it will deliver on the market’s high expectations, failure to do so would almost certainly see its share price take a big hit.

7 of 8 People Are Clueless About This Trillion-Dollar Market

One of our investors has recently returned from a research trip to Silicon Valley... and has a warning for fellow investors:

Because he works for an organization dedicated to spreading great investing ideas, his video report is free today... so you can see it and decide for yourself.

Don't miss your chance click here to learn about this warning and how you might be able to profit!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.