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How ASX investors can profit from the cloud computing boom

One investment theme that I’m excited about is the cloud computing boom.

Cloud computing is best described as the on-demand availability of computer system resources such as data storage and computing power, without direct active management by the user.

Gone are the days when we would put a disk into a computer and install a program. Today everything is stored in the cloud and accessible from any device or location.

More and more businesses and consumers are using cloud-based software each year, which has led to rapid growth in the cloud computing market.

Is it too late to get on the cloud computing bandwagon?

The good news for investors is that there’s still a long way to go before cloud computing growth plateaus.

In fact, according to research by Statista, the size of the public cloud computing services market is expected to grow from US$227.8 billion in 2019 to US$354.6 billion by 2022. That represents an increase of almost 56% in just three years.

I believe this growth means that companies exposed to the cloud computing market could be positioned perfectly to profit.

But which shares should you buy?

Three shares which I expect to benefit greatly from this boom are listed below:

Megaport Ltd (ASX: MP1)

Megaport is a provider of elasticity connectivity and network services in a total of 317 data centres globally. In the first half of FY 2020 its expanding footprint led to a 13% increase in customer numbers to 1,679 and an 26% jump in annualised revenue to $54.6 million. With demand for its services continuing to increase because of the cloud computing boom, I believe it is well-placed for further strong growth over the coming years.

NEXTDC Ltd (ASX: NXT)

NEXTDC could be one of the best ways to play the cloud computing thematic on the Australian share market. The innovate data centre operator has a collection of world class operations in key locations across the country. Demand for its services has been growing very strongly in recent years, leading to strong earnings growth. And with demand expected to continue growing at a rapid rate for some time to come, the future looks bright for NEXTDC.

Xero Limited (ASX: XRO) 

Xero is a cloud-based business and accounting platform provider that is growing quickly in the US, UK, Australia, South Africa, and parts of South East Asia. I like Xero due to its attractive economics, a market leading product, and its large addressable market. While the coronavirus outbreak could limit its subscriber growth in the near term, I expect it to accelerate when conditions return to normal.

These 3 stocks could be the next big movers in 2020

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James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended MEGAPORT FPO. 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.

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