Cloud computing has emerged as the foundation of the modern digital economy, offering unparalleled scalability, flexibility, and cost efficiency. Companies providing cloud services are experiencing robust growth due to increased adoption across industries.
Given this industry’s robust prospects, you might consider investing in fundamentally sound cloud stocks like Oracle Corporation (ORCL), Commvault Systems, Inc. (CVLT), and Docebo Inc. (DCBO), that are positioned for long-term growth.
The cloud computing market is anticipated to grow to $2.29 trillion by 2032, growing at a CAGR of 16.5%. One of the major factors influencing the cloud computing market is the increase in digital transformation, and intense competition among cloud hyper-scalers.
According to Edge Delta, more than 90% of companies worldwide already use cloud services, and this number is only projected to grow. Sectors like healthcare, education, and retail are digital transforming, driver being cloud adoption. As per a study, companies selling cloud services have the potential to create 472,000 jobs in the U.S. and abroad over the next five years.
As advanced technologies like AI and edge computing integrate with cloud platforms, the industry is set to redefine the digital landscape. This ongoing evolution ensures that cloud providers will remain pivotal in supporting innovation, making them a compelling choice for investors focused on long-term growth.
Now, let’s examine the Software - Application industry stocks in detail, beginning with the third choice:
Stock #3: Oracle Corporation (ORCL)
ORCL offers products and services that address enterprise information technology environments worldwide. It provides cloud software applications, cloud-based industry solutions, application licenses, infrastructure technologies, databases, Java, middleware, hardware products, and consulting and customer services.
On October 29, ORCL’s Health unveiled a new version of its Clinical AI Agent built on the latest generative AI technology, providing a comprehensive set of advanced AI services for medical providers. This technology will help improve patient-provider interactions by combining comprehensive clinical intelligence with a multimodal voice user interface to automate and unifying a variety of clinical workflows.
On the same day ORCL unveiled its next-generation electronic health record (EHR) that is designed to embed AI across the entire clinical workflow to automate processes, deliver insights at the point of care, and simplify documentation, prep, and follow up for physicians and staff with maximum security. This innovation is to transform burden from an administrative into a clinical asset to help improve care delivery.
In the fiscal first quarter that ended on August 31, 2024, ORCL’s revenue increased 6.9% year-over-year to $13.31 billion. The company reported non-GAAP income from operations of $5.71 million, indicating a 12.9% increase from the prior-year quarter with a non-GAAP operating margin of 43% (up 200 bps year-over-year).
ORCL’s non-GAAP net income came in at $3.96 million, up 18% year-over-year, while its non-GAAP net income per share grew 16.8% from the year-ago value to $1.39.
Analysts expect ORCL’s revenue for the second quarter ending November, 2024, to increase 9.1% year-over-year to $14.12 billion, while its EPS for the same period is expected to grow 10.6% from the prior-year quarter to $1.48. The company surpassed EPS estimates in three of the trailing four quarters, which is promising.
Moreover, ORCL’s revenue has grown at CAGRs of 9.6% and 6.4% over the past three and five years, respectively. In addition, its total assets increased at 6.3% CAGR over the past five years.
ORCL shares have surged 73.3% year-to-date and 64% over the past nine months to close the last trading session at $182.70.
ORCL’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ORCL has a B grade for Stability, Sentiment, and Quality. It is ranked #34 out of 128 stocks in the Software - Application industry. Click here to see the additional ratings for ORCL (Growth, Value, and Momentum).
Stock #2: Commvault Systems, Inc. (CVLT)
CVLT provides data protection and information management software applications and services to large enterprises, small and medium-sized businesses, and government agencies globally. Its offerings include Commvault Backup and Recovery, Commvault Disaster Recovery, Commvault Complete Data Protection, Commvault HyperScale X, and Metallic Data Protection-as-a-service.
On October 8, CVLT expanded its partnership with Google Cloud. CVLT will provide a new solution, Commvault®, for Cloud Backup & Recovery for Google Workspace. This advanced solution will deliver comprehensive, end-to-end enterprise-grade protection, multi-layered cyber resilience, and the simplicity of SaaS.
On the same day, CVLT launched Cloud Rewind, a cloud-native application recovery and rebuild program on its platform. This unique offering will help businesses restore data within minutes after a cyberattack, simplifying cloud cyber recovery.
CVLT’s total revenue for the second quarter (ended September 30, 2024) increased 16.1% year-over-year to $233.28 million. Further, its non-GAAP income from operations grew 13.6% from the prior year’s quarter to $47.75 million.
The company’s non-GAAP net income for the quarter amounted to $37.58 million or $0.83 per share, reflecting an increase of 19.3% and 18.6% from the same period last year, respectively. Also, its non-GAAP free cash flow rose 34.1% from the year-ago value to $53.74 million.
The consensus revenue estimate of $245.81 million for the fiscal third quarter (ending December 2024) represents a 13.4% increase year-over-year. The consensus EPS estimate of $0.87 for the same quarter indicates an 12.1% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
CVLT’s EBIT has grown at CAGRs of 23.7% and 33.3% over the past three and five years. Likewise, the company’s diluted EPS has increased at a CAGR of 98.3% over the past three years.
Shares of CVLT have gained 135.2% over the past year and 81.1% over the past nine months to close the last trading session at $171.63.
It’s no surprise that CVLT has an overall rating of B, equating to a Buy in our POWR Ratings system. It has an A grade for Quality and a B for Sentiment. Out of 128 stocks in the Software – Application industry, CVLT is ranked #19.
Beyond what is stated above, we’ve also rated CVLT for Growth, Value, Momentum, and Stability. Get all CVLT ratings here.
Stock #1: Docebo Inc. (DCBO)
Based in Toronto, Canada, DCBO operates as a learning management software company that provides artificial intelligence (AI)-powered learning platform internationally. It provides Learning Management System (LMS) to train internal and external workforces, partners, and customers.
On October 2, DCBO partnered with TEDAI for the TEDAI Vienna event, serving as the business learning partner. DCBO played a vital role in showcasing how enterprises can harness AI to transform workplace learning and development. This collaboration highlights the company’s commitment to reshaping the future of work through AI.
During the third quarter (ended September 30, 2024) DCBO's revenue increased 19.2% year-over-year to $55.43 million. Further, its gross profit grew 19.2% from the prior year’s quarter to $42.80 million. The company’s operating income amounted to $4.72 million, up 51.7% year-over-year.
In addition, its adjusted EBITDA rose 92.4% from the year ago value to $8.68 million. DCBO’s adjusted net income for the quarter amounted to $8.26 million or $0.26 per share, reflecting an increase of 66.7% and 80%, respectively, from the same period last year.
Street expects DCBO’s revenue for the fiscal fourth quarter (ending December 2024) to increase 14.1% year-over-year to $56.24 million. Moreover, its EPS estimate of $0.27 for the same period indicates an 8.7% year-over-year growth. In addition, it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Over the past three and five years, DCBO’s revenue income grew at CAGRs of 30.9% and 41.3%, respectively, while its total assets grew at 53.7% CAGR over the past five years.
Over the past six months, the stock has surged 37.9%, closing the last trading session at $49.36.
DCBO’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and Quality and a B for Growth. Within the same industry, it is ranked #6. Click here to see DCBO’s ratings for Value, Momentum, and Stability.
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ORCL shares were unchanged in after-hours trading Friday. Year-to-date, ORCL has gained 77.46%, versus a 27.97% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
