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Many cloud computing stocks rallied over the past year even as the broader market was weighed down by the trade war, the COVID-19 crisis, and other macro headwinds. Let’s examine three leading cloud companies to see how they weathered the recent challenges — and why their stocks remain compelling long-term investments.
Amazon (NASDAQ:AMZN) Web Services (AWS) is the world’s largest cloud infrastructure platform. It accounted for 31% of the market in the second quarter of 2020, according to Canalys, while its largest rival, Microsoft’s (NASDAQ:MSFT) Azure, controlled 20%.
Image source: Getty Images.
Demand for cloud infrastructure services, which lend out computing power, storage, and software development tools to companies, is rising as people access more cloud-based services, apps, and streaming services.
AWS’ net sales rose 31% year-over-year to $21 billion, or 13% of Amazon’s top line, in the first half of 2020. The segment’s operating income grew 48% to $6.4 billion, or 65% of Amazon’s total operating profit.
AWS’ stable profits subsidize the growth of Amazon’s lower-margin e-commerce and digital businesses. That’s why Amazon can consistently sell its products at low prices while expanding its 150-million member Prime ecosystem with cheap hardware devices, original streaming content, and other loss-leading perks.
Amazon’s total revenue rose 26% year-over-year to $164.4 billion …
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