3 Best Cloud Stocks to Buy in May

Cloud computing stocks are a favorite among many technology investors, in part, because their market potential is massive. The global cloud computing industry will operate in a market estimated to grow to about $1.6 trillion by 2030, up from $524 billion right now, according to a report from Precedence Research.

Of course, not all companies will benefit equally. The tech companies that have established their leads in specific niches are likely to benefit the most in the coming years. That means investors might want to pay close attention to the strong cloud positions that The Trade Desk (TTD 1.29%), CrowdStrike Holdings (CRWD 2.97%), and Amazon (AMZN 3.43%) have established. Here's why these three cloud stocks are worth considering this month.

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The Trade Desk has been a bright spot in an otherwise dim tech sector lately. The company, which sells advertising on its platform across connected TVs, the web, and mobile, saw its share price spike 43% year-to-date and more than double over the past three years.

Investors responded positively to the company because it's built a next-generation ad platform that is actually growing at a time when many other ad companies are slowing down. The Trade Desk's revenue increased 24% year over year in the fourth quarter to $491 million and the company maintained a 95% customer retention rate for nine straight years.

While some advertisers are skittish right now as they prepare for a potential recession, The Trade Desk continues to position itself for the future. The ad tech market is moving away from pesky online trackers, called cookies, and The Trade Desk helped develop an anonymous tracker, called UID 2.0, that's been adopted by many large companies in the industry. 

This helps the company position itself as an innovative ad company leader, and that's a very important place to be in considering that the digital ad market will be worth $835 billion by 2026.

This cloud-based cybersecurity company is firing on all cylinders right now. Consider that CrowdStrike's sales popped 54% to $2.2 billion in fiscal 2023 (ended Jan. 31) and net cash from operations came in at $941 million, up from $575 million in fiscal 2022.

CrowdStrike is tapping into increasing demand for subscription-based cybersecurity services and customers continue to flock to the company. CrowdStrike increased its net customer count by an impressive 1,873 in its latest quarter. 

Investors wondering how well this cybersecurity company can weather a potential economic downturn need only look at the company's $2.7 billion in cash -- and just $741 million in long-term debt -- to be fully satisfied that even if cloudy economic days are ahead CrowdStrike can weather them well. 

Management is very optimistic as well. It's estimating $3 billion in revenue for the current fiscal year, which would be an increase of 34% from 2023. With that growth mixed with the company's current cash position and rising customers, CrowdStrike looks poised to stay ahead in the cloud-based cybersecurity market. 

Last but not least is Amazon and its ultra-popular Amazon Web Services (AWS) cloud company. AWS holds a staggering 32% share of the cloud infrastructure market, outpacing the shares of rivals Microsoft with 23% and Google with 10%. 

Competition is fierce in this space right now, but Amazon's early lead should help the company remain a top contender for years to come. The global public cloud market will be worth an estimated $881 billion by 2027, so there's still plenty of room for growth.

Amazon, like many other tech companies, faces some macroeconomic headwinds right now, but that hasn't caused the company's cloud sales to peter out. Revenue from its AWS segment increased 16% year over year in the first quarter, hitting $21.4 billion.

It's also worth pointing out that there are huge long-term cloud opportunities for Amazon that haven't fully been realized, including artificial intelligence initiatives. AWS already has AI services integrated into some of its cloud offerings and Amazon CEO Andy Jassy said recently that the company isn't done inventing new services for AWS.

In fact, Jassy said on the recent earnings call that "... few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that's coming." All of that should help Amazon to continue to outpace its rivals.