The rapidly rising demand for cloud computing services is providing a tailwind to leaders in the field. If they play their cards right, some of those top players in the industry could deliver excellent returns for many years to come.
Microsoft (MSFT +2.20%), one of the largest companies in this market, and Veeva Systems (VEEV +0.10%), which dominates a small niche of the space, look likely to be among those that can outperform the broader market over the long run. Let's discuss why it would be a smart move to invest $1,000 in either (or both) of these stocks.
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1. Microsoft
Microsoft is part of an exceedingly rare group of publicly traded companies that have achieved the incredible feat of having a market capitalization of $4 trillion. Despite this accomplishment and its massive size, the stock isn't done outperforming the market. Microsoft's leadership in cloud computing and artificial intelligence (AI) gives it significant long-term tailwinds. Consider the company's financial results. In the fourth quarter of its fiscal 2025, ending on June 30, Microsoft's revenue increased by 18% year over year to $76.4 billion.
The company's earnings per share (EPS) came in at $3.65, 24% higher than the prior-year quarter. Microsoft's free cash flow for the quarter was $25.6 billion, almost 33% higher than the year-ago period. If Microsoft can continue posting results like these, its share price should remain northbound.
There's good reason to believe that it can. Microsoft's cloud division, Azure, has been growing faster than the rest of the business and now boasts more than $75 billion in annual revenue. That's a quarter of Microsoft's top line for its fiscal year 2025.
NASDAQ: MSFT
Key Data Points
AI is helping to speed things up, and it's a business where Microsoft appears to be outpacing many of its competitors. As CEO Satya Nadella said during the company's earnings call: "We continue to lead the AI infrastructure wave, and took share every quarter this year." Microsoft has been gaining ground on Amazon in the cloud industry as well.
Meanwhile, both cloud computing and AI are still in their early stages of growth. As Amazon CEO Andy Jassy pointed out about a year ago, 85% of IT spending still occurs on-premises.This is good news for Microsoft and its peers.
The company's business has several other noteworthy qualities. Microsoft has a wide moat thanks to switching costs and its brand name. It boasts a rock-solid balance sheet and a higher credit rating than the U.S. government. Lastly, Microsoft has a terrific dividend program, having increased its payouts by 167.7% in the past decade.
Microsoft is firing on all cylinders, and there's still time to get on the bandwagon. Investors can get one share of the company with $1,000.
2. Veeva Systems
Veeva Systems is a minor player in the cloud compared to leaders like Microsoft. However, Veeva Systems specializes in developing and offering cloud solutions to life science companies. This industry has stringent demands that set it apart from most others. It is an incredibly regulated sector that requires significant upfront investment and years of research and data collection to develop products with no guarantee of future success.
The company makes its cloud solutions with these specific factors in mind. Veeva has achieved great success, as evidenced by the fact that many of the largest pharmaceutical companies have opted to use its platform for some of their cloud needs.
NYSE: VEEV
Key Data Points
Meanwhile, Veeva Systems continues to deliver excellent financial results, which is why its shares are up substantially this year. During the first quarter of its fiscal 2026, ended on April 30, Veeva's revenue grew by 17% year over year to $759 million. Its adjusted EPS of $1.97 rose by 31.3% compared to the year-ago period. The company met and surpassed its $3 billion revenue run rate goal, which it had projected it would reach by 2025 several years ago.
It's not the first time Veeva Systems has set and met such a goal. That speaks volumes about the business and the management team leading it. There is still considerable room for growth for the company as the life sciences industry continues to expand, and demand for its services continues to rise. Veeva also benefits from switching costs, as its clients rely on its services for critical day-to-day activities. That makes Veeva Systems likely to remain a leader in its corner of the cloud industry and perform well over the long run.
Investors can acquire three of the company's shares with $1,000.
