The term "cloud computing" or simply "the cloud" have been talked about a lot during the coronavirus pandemic.
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.
This technology has certainly come to prominence during the last couple of months as people work from home or stream endless hours of TV shows via Netflix.
And with more and more software and services moving online, the cloud computing market is expected to grow over the coming years.
In fact, research shows that there's still a long way to go before cloud computing growth plateaus.
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 and is unlikely to stop there.
In light of this, I believe companies exposed to the cloud computing market could be positioned perfectly to profit over the next decade and might be worth considering as long-term investments.
Which ASX shares should you buy?
The good news for Australian investors is that there are two quality companies on the local share market with direct exposure to cloud computing.
They are as follows:
Megaport Ltd (ASX: MP1)
Megaport is the leading provider of elasticity connectivity and network services. It operates through a total of 329 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. This strong form continued in the third quarter with annualised revenue rising a further 18.7% quarter on quarter to $64.8 million. And with demand for its services continuing to increase because of the cloud computing boom, I believe Megaport could have a very bright future ahead of it.
NEXTDC Ltd (ASX: NXT)
The other way to gain direct exposure to cloud computing is NEXTDC. It is an innovative data centre operator which operates a collection of world class operations in key locations across Australia. Demand for its services has been growing very strongly in recent years and particularly in 2020. This led to NEXTDC recently announcing the construction of its third data centre in Sydney and bringing forward planned capacity additions in other markets to meet the rising demand. I'm confident there will be more of the same in the coming years, which should drive strong earnings growth as it scales.
