Cloud computing has been one of the hot themes in 2023’s big tech comeback. But its strength should extend beyond the short-term investment horizon. Analysts at tech research and consulting firm Gartner foresee cloud computing as an operational necessity in five years or less.
The use of cloud computing services caught fire amid the COVID-19 pandemic. Businesses then migrated heavily to online services. So a reliance on cloud computing was emphasized to keep operations moving forward through social distancing measures.
Macroeconomic headwinds — namely high interest rates and staff reductions in a post-pandemic environment — saw the cloud computing sector tech a hit, especially in 2022. However, big tech’s 2023 comeback reemphasized the long-term growth prospects of cloud computing. And that should only increase in the years to come.
“While many enterprises still see the cloud as a useful way of providing additional capacity over the next few years, they’ll come to see it as a source of innovation. And by 2028 most will see it as a necessity, according to Gartner analysts,” Tech Republic reported.
Furthermore, cloud computing technology itself will be undergoing enhancements to meet the increased demand in today’s digital world. This should only push more companies to become reliant on cloud services to run their operations.
“Part of that will be the result of the conversion or rewriting of legacy applications — perhaps running on mainframes or legacy mid-range systems — to make them ready for the cloud age,” Tech Republic added. “At its recent IT Infrastructure, Operations & Cloud Strategies conference in London, analyst firm Gartner said that by 2028, these modernization efforts will result in 70% of tech workloads running in a cloud environment, up from just 25% today.”
Trade the Cloud Trend
Traders who want to get exposure to cloud computing can opt for single-stock holdings that specialize in the subsector. However, there’s an easier way to get overall exposure and maximize profit potential without having to resort to a margin account. That’s via leveraged exchange raded funds (ETFs).
Traders who think the cloud computing trend will continue to provide gains into 2024 and beyond can look at the Direxion Daily Cloud Computing Bull 2X Shares ETF (CLDL ), which seeks 200% of the daily performance of the Indxx USA Cloud Computing Index. The companies included in the index are involved in the delivery of computing services. Those include servers, storage, databases, networking, software, analytics, and more, over the internet — more broadly referred to as “the cloud.”
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