Please ensure Javascript is enabled for purposes of website accessibility

Why Is the Cloud-Computing King

By Evan Niu, CFA – Updated Apr 6, 2017 at 4:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Amazon's EC2 powered virtual supercomputer beats most traditional supercomputers.


I'm not referring to the meaning of life, mind you. I'm talking about the annual list of the Top 500 supercomputers in the world. When you look at that list,'s (Nasdaq: AMZN) virtual supercomputer built using its Elastic Compute Cloud, or EC2, ranks No. 42, according to a recent Wired report.

The reason that's such a feat is that Amazon's virtual powerhouse is in the clouds and its raw processing power is decentralized and spread throughout its global network of data centers. This contrasts with the old-school approach of calling up Cray (Nasdaq: CRAY) or Penguin Computing and ordering a multimillion-dollar machine, similar to what the feds just ordered sporting NVIDIA (Nasdaq: NVDA) and Advanced Micro Devices (NYSE: AMD) chips or this one using only ARM Holdings (Nasdaq: ARMH)-based NVIDIA chips.

Cycle Computing is a small company that helps researchers and businesses tap into EC2's supercomputing power, and CEO Jason Stowe is naturally a big proponent of cloud-based processing. Stowe believes that while there is still a place to having one's own dedicated supercomputer, those days are numbered as cloud-based supercomputing is able to increasingly satisfy what the market needs.

Amazon provides an option that is more affordable and can handle most things thrown at it. For example, Cycle helped set up a virtual supercomputer running 30,000 cores on EC2 for about $1,279 per hour. That may sound like a lot to the average user, but it's chump change when compared with the alternative a researcher or business would face, which Stowe details:

If you created a 30,000-core cluster in a data center, that would cost you $5 million, $10 million, and you'd have to pick a vendor, buy all the hardware, wait for it to come, rack it, stack it, cable it, and actually get it working. You'd have to wait six months, 12 months before you got it running.

The takeaway is that even though Amazon's solution doesn't top the nosebleed horsepower of the No. 1 supercomputer, Japan's K Computer, which is almost 44 times as fast, it offers what will satisfy what many entities need and does so at a fraction of the monetary and time expenditures.

EC2 sees competition from Microsoft's (Nasdaq: MSFT) Azure and Rackspace Hosting (NYSE: RAX), but you also don't see those names within the first 100 spots of the supercomputer list.

It's no wonder Amazon is the cloud-computing king.

The mobile revolution and cloud computing are fundamentally linked, and the mobile revolution is set to become The Next Trillion-Dollar Revolution. There are lots of companies that are set to cash in on it, but one in particular has excellent prospects. The company is one of few players that will help power the mobile devices of the future, and it also has exposure to the explosive growth in China. I'm so bullish on the stock that I've given it an "outperform" CAPScallGet access to this 100% free report to find out what company I'm talking about!

Fool contributor Evan Niu has sold a bullish put spread on NVIDIA. He owns shares of and ARM Holdings, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft and Motley Fool newsletter services have recommended buying shares of Rackspace Hosting, Microsoft,, and NVIDIA, writing puts in NVIDIA, and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
$232.90 (-1.94%) $-4.60, Inc. Stock Quote, Inc.
$113.00 (-1.57%) $-1.80
Rackspace Hosting, Inc. Stock Quote
Rackspace Hosting, Inc.
Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
$63.36 (-1.22%) $0.78
ARM Holdings plc Stock Quote
ARM Holdings plc
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$121.39 (-0.66%) $0.81
Cray Inc. Stock Quote
Cray Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.