Needless to say, the fact that the cloud is a massive technology theme would be the biggest understatement of the past 50 years. Cloud computing, storage, data retrieval and countless other nuances are changing the future of almost everything we know. Why have any CDs or DVDs if all the entertainment is stored in the cloud to be accessed and enjoyed? Huge troves of data can be stored for analytics and information. The bottom line is simple: it has changed everything, and done it over an incredibly short time frame.
Everybody that follows the space knows who the big players are: Alphabet, Amazon.com and Microsoft, followed to a lesser degree by Cisco Systems and other companies. The question for investors is who are the major suppliers to these mega-technology leaders that keep things running?
In a true magnum opus, Karl Keirstead and the entire Deutsche Bank technology team have produced a 100-page research report that covers every aspect of the cloud. While it’s impossible to write about the total genius and depth of this piece, we can get right down to the stocks that Keirstead and the analysts feel are a great way to play the cloud theme, in addition to owning the big three.
Ten companies come up as top suppliers to the big cloud behemoths, and they are an outstanding ancillary way into the big picture theme.
1. Arista Networks Inc. (NYSE: ANET) delivers software-driven cloud networking solutions for large data center and computing environments. It is a solid pick for network switches. Its shares closed Tuesday at $95.99 apiece.
2. Broadcom Ltd. (NASDAQ: AVGO) is a leading designer, developer and global supplier of a broad range of analog and digital semiconductor connectivity solutions. This is a solid pick for network chips. The stock closed most recently at $205.91
3. DuPont Fabros Technology Inc. (NYSE: DFT) is a leading owner, developer, operator and manager of enterprise-class, carrier-neutral, large multi-tenant wholesale data centers, as well as a good pick for data center leasing. The shares closed at $48.26.
4. Equinix Inc. (NASDAQ: EQIX) provides data center services to protect and connect the information assets for enterprises, financial services companies and content and network providers. It is a solid pick for network connectivity. The stock closed at $380.64.
5. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide. The analysts note that the company has a lock on cloud server central processing units. The company also supplies field programmable gate arrays to Microsoft. This great large cap pick closed yesterday at $36.35 a share.
6. NVIDIA Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles. It is a top graphics processing unit supplier. This top chip pick closed at $119.13.
7. Xilinx Inc. (NASDAQ: XLNX) is the main supplier of field programmable gate arrays to Amazon Web Services. Another solid chip pick, its shares closed at $58.09
8. Quanta Services Inc. (NYSE: PWR) provides specialty contracting services to the electric power and oil and gas industries in North America and internationally. Shares closed Tuesday at $36.46.
9. Western Digital Corp. (NASDAQ: WDC) provides hard disk drives and pays solid dividends. The stocks closed at $79.05.
10. Seagate Technology PLC (NASDAQ: STX) also provides hard disk drives and pays solid dividends. Its shares were last seen at $46.10.
Many of these top companies had huge 2016 returns, and NVIDIA was the top performing stock in the S&P 500. So while the trend for cloud related suppliers is clearly higher, and the forward possibilities are tremendous, it may make sense to edge capital in at intervals and see if we don’t get a pullback in the markets.