Investing in Cloud Computing, Anyone else sharing the same mindset?

[james_conor]

I'm seeing a high trend with companies planning their cloud adoption strategies, I strongly feel the market is still in the rising curve and there is more tier 2 and tier 3 players to join the bandwagon. I'm looking at two options here,

1. Invest directly in the company stock: MSFT,ADBE,AMZN,CLDR,EQIX,GOOG,NVDA and AMD

1. Invest via US bluechip funds.
   

Does anyone else share a similar mindset w.r.r to cloud computing here? What's your strategy?

 

[rosebuds1111]

@james_conor I believe AMZN, MSFT, GOOG will be competing against each other and there is no room for another player.

 

[coffeemate]

@rosebuds1111 IBM is also in contention after they bought Red Hat.

 

[james_conor]

@coffeemate The Lion's part of the market share is withing AWS itself approx 42%, followed by Azure and Google Cloud. I really doubt whether IBM has the manpower to compete against these three giants. Of course, Acquiring Redhat will give them a more firm grip and a jumpstart. But I would bet top three players for now.

 

[coffeemate]

@james_conor I think Azure will take lead eventually with AWS following closely. I wonder if Google can make serious dent. They are far behind. Its strength is ML/AI services - only hope to compete for top position.

 

[rosebuds1111]

@coffeemate I'd love to invest in all three and let future decide. Seems an all win situation. Given the amount paid to buy is right.

 

[overcomer9115]

@coffeemate Google Cloud will eventually make it in, AI/ML is the future and GCP is making some good leaps there.

 

[profmaliki]

@james_conor A strategy that focusses only on cloud computing companies, ignores the reductions in expenses possible in companies that switch from operating on-premise data centers. And given the usage of IT, the number of such companies that benefit from switching to using cloud computing, is not a small number, and neither are their expenses. It just makes sense to buy the broader market, given the impact on the topline for cloud computing companies, and on the bottom for the rest of the economy.

 

[hosnloem]

@james_conor Cloud computing started off (mainstream) around 2011, and companies have been adopting it since 2012. Have you been in a coma? All the companies in your list are already overvalued.

 

[lukapyon03]

@hosnloem This is exactly what I was thinking. There is extreme competition at the top. Due to this some of the storage companies have already started selling off some of their data center solutions. Networking companies are finding it extremely hard to grow anymore. This industry has started its consolidation phase. A lot of cloud companies have fallen off the radar. Amazon, MSFT at the top with Google a very distant third are the players remaining.

Private clouds are ok but does not have big money.

 

[alexwhitt]

@james_conor Too early to select as main stream. Companies are still trying to rationalize the cost/scaling benifit associated with it.

 

[james_conor]

@alexwhitt

Companies are still trying to rationalize

The mainstream companies( Banking, Healthcare, Oil & Gas and Insurance) have already started the transformation in their respective verticals. I believe in the next five years we will witness more tier 1 player joining the party. In the long run, It makes complete sense to switch to the cloud to reduce the OP-ex of existing companies and the Cap-ex of new companies. The sheer investment required to build a data center itself won't make sense in the coming years unless they are handling very confidential govt data.

 

[alexwhitt]

@james_conor All companies are surely looking at migrating to cloud eventually. No doubt.
They are all doing it in a phased manner currently.
The cost rationalization has not kicked in completely is what I am trying to say. Many aspects require dedicated in house infrastructure for security, latency, government regulations, lower TCO etc. Not all software vendors are digital ready. Skill availability at an optimum price is another concern. The monthly billing based model is something customers are still trying to rationalize.

So will I invest in companies building digital infrastructure and services, hell yes. What is the extent to which I would wish to invest (5-10-50%) - put me at a lower end for now.

 

[ivank]

@alexwhitt Too early? Aws already won

 

[seckel]

@james_conor Vmw

 

[uno34]

@james_conor Any idea how does one invest via mutual funds into these companies esp FAANG companies from India?

 

[rosebuds1111]

@uno34 Feeder funds are there. One can buy direct stocks as well but they are very costly.

 

[resjudicata]

@rosebuds1111 Reminder that Feeder Fund's TER is the fund+underlying fund. So if the feeder fund charges 0.1% but the underlying fund it invests in charges 2% The TER will be 0.1+2=2.1%.

 

[rosebuds1111]

@resjudicata Still better than direct investing. Direct Investing in Foreign stocks is a hassle with respect to ITR:

• You have to use ITR-3 form.
• Declare all assets every year.
• Pay Capital gains which are same as of Debt fund in India when you sell.
• And, if you want to re-invest, you first have to bring money back in India and then send back, incurring a lot of currency conversion charges.

 

[resjudicata]

@rosebuds1111 Yes it is a complete hassle to do that but might I suggest a alternative Nasdaq 100 Motilal Fund. The OP is asking for FAANG companies and Nasdaq 100 has all of them in one fund. The best part is unlike feeder funds the TER is not bad at 0.54%. 0.64% if you use the FOF.