Many high-growth cloud stocks recently crashed as rising interest rates drove investors toward more conservative sectors. As a result, the largest and oldest cloud computing exchange-traded fund, the First Trust Cloud Computing ETF (SKYY 0.29%), lost about a third of its value this year.

It's tempting to avoid cloud stocks entirely and stick with recession-resistant plays in this growling bear market, but investors could be leaving a lot of money on the table by avoiding this high-growth sector. After all, the global cloud market could still grow at a compound annual growth rate (CAGR) of 15.7% between 2022 and 2030, according to Grand View Research.

A person checks a phone while holding a cardboard cutout of a cloud.

Image source: Getty Images.

So today, I'll highlight three cloud stocks that could still be worth buying in this challenging market -- ServiceNow (NOW 0.93%), Autodesk (ADSK 0.35%), and Twilio (TWLO 0.88%) -- and explain why they're still well poised to generate impressive long-term returns.

1. ServiceNow

ServiceNow's cloud-based services enable companies to manage their digital workflows. Large companies that operate unstructured work patterns can deploy its services to define, manage, automate, and structure their workflows -- which usually saves a lot of time and money.

ServiceNow served only 602 customers back in 2010, but it ended 2021 with over 7,400 customers -- including about 80% of the Fortune 500. Between 2012 and 2021, its revenue soared from $244 million to $5.9 billion, representing a CAGR of 42.5%. It also turned profitable on a GAAP (generally accepted accounting principles) basis over the past three years.

Last May, ServiceNow predicted it would generate more than $16 billion in annual revenue in 2026 -- which would represent a CAGR of at least 22.1% from 2021. This January, CEO Bill McDermott told investors that ServiceNow could continue to "flourish in any economic environment."

ServiceNow's future looks bright, but its stock price has still declined more than 20% this year amid the broader sell-off in high-growth tech stocks. The stock still isn't cheap at 66 times forward earnings and 13 times this year's sales, but its rosy outlook suggests it deserves that premium valuation.

2. Autodesk

Autodesk develops AutoCAD, the computer-aided design and drafting application that is widely used by architects, engineers, graphic designers, city planners, and other professionals. It also provides other software for the construction, manufacturing, and media markets.

Over the past decade, Autodesk converted its desktop software into cloud-based services -- which locked in its users with sticky subscriptions. Between fiscal 2012 and 2022 (which ended this January), its revenue grew at a steady CAGR of 7% and doubled from $2.2 billion to $4.4 billion.

Autodesk also turned profitable again in fiscal 2020, and its adjusted earnings per share (EPS) increased 45% in fiscal 2021 and 25% in fiscal 2022. For fiscal 2023, it expects its revenue to rise 13% to 15%, and for its adjusted EPS to increase 27% to 31% -- even after absorbing a $40 million impact (about 3% of its annual revenue) from the suspension of its sales in Russia.

Autodesk's stock price has declined nearly 40% over the past 12 months as the bulls lost their appetite for cloud stocks, but it now looks reasonably valued at 27 times forward earnings and eight times this year's sales.

3. Twilio

Twilio's cloud-based platform handles text messages, voice calls, and other communications-based content for mobile apps. Instead of developing those features from scratch -- which can be buggy, time-consuming, and difficult to scale as an app gains more users -- developers can simply outsource them to Twilio with a few lines of code.

Twilio has grown like a weed since its public debut in 2016. Between 2016 and 2021, its annual revenue rose from $277 million to $2.84 billion, representing a CAGR of 59.3%, as its total number of active customer accounts rose from 36,606 to 256,000. 

Twilio acquired several companies after its IPO, but it still expects its organic revenue -- which excludes future acquisitions -- to continue growing more than 30% annually over the "next several years."

That's an impressive outlook for a stock that trades at just four times this year's sales.

Twilio's stock lost more than three-quarters of its value over the past 12 months as investors fretted over its declining gross margins and ongoing losses. It had turned profitable on a non-GAAP basis from 2018 to 2020, but it racked up another disappointing net loss in 2021.

But on the bright side, Twilio still expects its gross margins to eventually rise from the low 50s today to more than 60% as economies of scale kick in. Twilio might stay in the penalty box this year, but it could still generate impressive returns in the future if it finally stabilizes its margins and narrows its losses.