International Business Machines Corporation’s IBM revenues declined more than 5% in the second quarter, the company said on Jul 20. It’s the company’s second consecutive quarter of revenue decline owing to the coronavirus outbreak.
However, the company witnessed a substantial increase in revenues for cloud needs, which was one of the highpoints in its performance in the last quarter as well. The coronavirus pandemic has helped the already booming cloud business go an extra mile, playing a key role in saving many tech companies and millions of jobs.
IBM, Other Tech Giants Score Big on Cloud Business
IBM revenues fell 5.4% in the second quarter due to reduced spending on computer equipment during the pandemic, the company said. However, the picture isn’t that gloomy as IBM has gained from more people going digital.
The company’s second-quarter revenues of $6.3 billion from cloud business jumped a whopping 30% from $4.8 billion a year ago, as demand for cloud needs increased. Cloud business is working miracles for many companies as large corporations accelerated their digital shift due to the coronavirus crisis. IBM is just one among those.
Cloud Business Poised to Grow
Cloud storage enhances business operations by leveraging mobile workforce with easy accumulation, archive, access and data recovery facilities. In addition, cloud enables storage scalability with minimal cost as compared to on-premise data centers, which, in turn, boosts its adoption among small and medium enterprises across the globe.
Tech companies, which have been saviors during the pandemic, are expanding their cloud business. Recently, Alibaba Group Holdings BABA partnered with Equinox, Inc. EQIX to expand its cloud services to markets in Europe, America and Asia Pacific.
Also, Microsoft Corporation MSFT and SAS jointly announced in June a strategic partnership making Azure the preferred cloud platform for the latter’s analytics portfolio. The two companies will enable customers to easily run their SAS workloads in the cloud, expanding their business solutions and unlocking critical value from their digital transformation initiatives. Earlier, Amazon.com, Inc. AMZN opened a datacenter region in Italy.
A number of companies are expecting their cloud usage to exceed plans due to the impacts of the COVID-19 pandemic. According to Cloud Storage Market by Component, Deployment Type, User Type and Industry Vertical report, cloud storage market size was valued at $46.12 billion in 2019 and is projected to reach $222.25 billion by 2027 at a CAGR of 21.9% from 2020 to 2027.
Our Choices
Tech companies have been aggressively expanding their cloud services, given that the coronavirus pandemic is far from over. Given the situation, we have shortlisted four tech companies that are sure to benefit from soaring demand for cloud services.
Box, Inc. BOX is a provider of a cloud content management platform. The platform enables internal and external collaboration on content, automation of content-driven business processes, development of custom applications, data protection, security and compliance features.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 35.1% over the past 60 days. Box carries a Zacks Rank #2 (Buy).
Zoom Video Communications, Inc.’s ZM cloud-native unified communications platform, which combines video, audio, phone, screen sharing and chat functionalities, makes remote-working and collaboration easy.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 193.1% over the past 60 days. Zoom sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dropbox, Inc. DBX offers a platform which enables users to store and share files, photos, videos, songs and spreadsheets. Dropbox, Inc. is headquartered in San Francisco.
The company’s expected earnings growth rate for the current year is 48%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. Dropbox sports a Zacks Rank #1.
Avalara, Inc. AVLR is a provider of cloud-based tax compliance solutions. It offers businesses of all sizes achieve compliance with transaction taxes including sales and use, VAT, excise, communications and other tax types.
The company’s expected earnings growth rate for the current year is 58.3%. Its shares have gained 47.8% over the past three months. Avalara carries a Zacks Rank #2.
Inovalon Holdings, Inc. INOV is a technology company which provides cloud-based data analytics and data-driven intervention platforms for the healthcare sector.
The company’s expected earnings growth rate for the current year is 19.6%. Its shares have gained 18.6% over the past three months. Avalara carries a Zacks Rank #2.
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