During the most recent earnings season in the United States several tech giants reported impressive earnings growth.
For at least two of these, Amazon and Microsoft, one key catalyst of this growth was the performance of their cloud businesses.
During the first quarter Amazon's cloud business delivered a 49% increase in segment revenue compared to the prior corresponding period to US$5.44 billion. Whereas Microsoft's Azure cloud business performed even better and saw revenue rise 93% on the prior corresponding period.
I believe these results demonstrate why there is so much hype around cloud computing right now.
But it isn't just Amazon and Microsoft that stand to benefit. The three Australian shares below are also likely to profit from this powerful trend. Here's why:
Macquarie Telecom Group Ltd (ASX: MAQ)
I think that Macquarie Telecom is one of the best options in the mid cap space right now thanks to its Hosting (cloud services) segment. Strong demand for its cloud services meant that in February the segment delivered a 30% increase in half-year profit. This means it now accounts for 60% of the company's EBITDA.
Megaport Ltd (ASX: MP1)
Megaport is a provider of elasticity connectivity and network services. What this essentially means is that it uses software to streamline the internet connection between its customers' data centres and major cloud service providers. One broker that likes what it sees is UBS. Yesterday it initiated coverage on Megaport with a buy rating and sizeable $5.20 price target.
NEXTDC Ltd (ASX: NXT)
As one of the world's leading data centre operators I believe NEXTDC is well positioned to profit from the seismic shift to the cloud. Unfortunately, though, I'm not the only one to think this. Investors have been piling in to buy NEXTDC shares this year, sending its share price hurtling higher. While I remain confident that it will deliver on the market's high expectations, failure to do so would almost certainly see its share price take a big hit.
