The cloud market hit $434 billion in 2022 and is projected to expand at a compound annual growth rate of 14% through 2030. The industry blew up in recent years, bolstered by thousands of companies adopting hybrid working styles amid the COVID-19 pandemic. Meanwhile, advances in artificial intelligence (AI) over the last year offered another boost to the market.
Countless cloud companies rushed to add AI services to their respective platforms in an effort to meet increased demand. As a result, it's not a bad idea to add a cloud stock to your portfolio to profit from the market's development.
So, here are three cloud stocks to buy in September.
1. Amazon
It would be challenging to overlook Amazon (AMZN 1.40%) in a discussion about cloud companies. The retail giant is home to the world's biggest cloud platform with Amazon Web Services, which hit $22 billion in sales in the second quarter of 2023 and holds a leading market share of 32%. The company has become a go-to for businesses seeking cloud services, attracting organizations such as Sony, Meta Platforms, Netflix, and more as clients.
Additionally, AWS is quickly expanding in AI. In June, the company unveiled several new features to its growing library of services. A tool called Bedrock is based on a language model similar to one that runs OpenAI's ChatGPT and can help customers build generative programs like chatbots.
Meanwhile, CodeWhisperer can produce code for developers, with HealthScribe providing a note-taking service for doctors and patients. According to Reuters, the new services have attracted thousands of businesses to AWS this year.
NASDAQ: AMZN
Key Data Points
Moreover, Amazon is diversifying its AI business by expanding into chip production. The company could soon control every aspect of its cloud business, developing its software and hardware. Amazon's dominance in the industry and growing venture in AI make it an attractive cloud stock this September.
2. Nvidia
As a leading chipmaker, Nvidia (NVDA +1.80%) spent years powering the data centers that make cloud computing possible. The company has collaborated with AWS for over a decade, being the platform's leading supplier of graphics processing units (GPUs).
When investing in cloud stocks, it's wise to consider backing all aspects of the industry rather than focusing exclusively on big names like AWS or Microsoft's Azure. Chips are crucial to the industry, and Nvidia is one of the biggest companies in the sector.
NASDAQ: NVDA
Key Data Points
Furthermore, Nvidia has massively profited from the boom in AI. The company's GPUs are the most powerful in the market, with demand soaring as numerous cloud platforms expand their AI services. In its fiscal Q2 2024 (ending July 30, 2023), Nvidia's revenue rose 101% year over year, driven primarily by a 170% increase in income from data centers.
Nvidia's stock climbed 237% since Jan. 1. While the rally has made it a slightly expensive buy, its forward price/earnings-to-growth ratio (PEG) of 0.09 indicates massive growth potential. So, if you're looking for a cloud stock to hold over the long term, don't count out Nvidia.
3. Advanced Micro Devices
Like Nvidia, Advanced Micro Devices (AMD 3.05%) substantially profited from cloud market growth. The company has formed lucrative partnerships with Microsoft and Alphabet, powering their respective cloud services with its hardware. In fiscal 2022, AMD's data center revenue rose 64% year over year, hitting $6 billion.
This year, the company has been developing chips to match Nvidia's AI offerings. AMD announced the MI300x in June, which it says will be its most powerful GPU to date. The new chip is promising, since cloud giants are growing desperate for increased competition in the market, as it will bring down the cost of GPUs.
As a result, AMD's AI chip expansion has immense support across the market. In fact, Microsoft is reportedly providing financial and engineering support to the company as it strives to create an alternative to Nvidia.
NASDAQ: AMD
Key Data Points
The AI market is expanding quickly and is projected to develop at a compound annual growth rate of 37% through 2030. Consequently, there will likely be plenty of space for AMD and Nvidia to enjoy massive gains from the industry.
As with Nvidia, AMD has an attractive forward PEG of 0.2, suggesting its stock is undervalued despite a recent rally. Chip stocks like AMD are increasingly compelling options for investing in the cloud market and allow investors to back countless other markets such as AI, gaming virtual/augmented reality, consumer products, and more.
