Why Now Is Finally the Time to Buy the Big Three Cloud Computing Stocks Before It's Too Late
Now could be the time for cloud computing stocks to shine.
Overview
The big three cloud computing providers of Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) have seen their stocks languish during much of the AI bull market as investors have wrestled with the massive amount of money these companies are spending on AI infrastructure capex.
However, commentary from Amazon CEO Andy Jassy may have just convinced the market how lucrative this business is for these companies. Jassy simply went over the economics of the cloud business model, saying Amazon breaks even on its AI chip and networking investments in two to three years, while their useful life is between five and six years. Meanwhile, most of its AI capacity is contracted out for at least five-year terms. Jassy also said the returns are generally better as time goes on because the actual data centers have a useful life of more than 30 years and those upfront costs don't need to be repeated.
Details
So if you've ever wondered why the big cloud companies are spending a huge amount on AI infrastructure, it's because they are locking in huge investment returns on this spending. The market is finally starting to realize this, which is why all three cloud computing stocks look like buys right now. Let's take a closer look at each.
Source
Originally published at www.fool.com.
Related Articles
- Meta Trades at a Forward P/E of 17, Below Its 5-Year Average, Making the Stock a Potential Bargain as Zuckerberg's Net Worth Rebounds
- Don't Buy Strategy Stock When You Can Just Buy Bitcoin
- If the $1.3 Trillion Chip Stock Sell-Off Was a Warning for the S&P 500, History Repeatedly Suggests 1 Move to Avoid