Cloud Computing

The cloud computing industry could be poised for massive growth in the coming decades, and equities in this space appear attractively positioned at the moment.

Even though many market participants are becoming concerned with the outlook for growth stocks, it could still be worthwhile to consider cloud computing stocks later this year, especially if these stocks sell off on the back of geopolitical or economic tensions this year.

In today’s edition, we explore the unique positioning of cloud computing equities and cover some of the main ETF products.

Cloud Computing Industry Outlook

In 2010, there was only one cloud computing company with a market cap above $1 billion. Nearly 15 years later, the industry has become much more dominant, driven by a 35-65% CAGR in the early years of the cloud computing industry.

The cloud computing industry still has strong growth potential in the coming years, and this industry could be worth considering later in 2026. Cloud computing equities have had weak returns since 2021, and now looks like a good time to consider an entry into this industry.

Cloud Computing Industry Growth Outlook

Cloud computing has had massive growth in recent years, and even smaller companies have begun embracing cloud services. According to Public First, over half of all companies in the United States use some form of cloud services.

Goldman Sachs projected that the industry’s value could reach $2 trillion by the end of this decade, equivalent to a CAGR above 20%.

These diverse sources of growth should help support the cloud computing industry’s outlook in the coming years.

Many companies began to accelerate their cloud migration in the 2020s, with notable developments including Moderna using cloud computing to support its efforts in creating the first clinical batch for its vaccine in just 42 days.

Many companies, including smaller players, have been ramping up their IT investments in recent years. Gartner projects that IT spending could increase by 11.1% globally in 2026, despite the numerous economic headwinds. For many companies, investing in cloud computing is a crucial and necessary technological investment.

One important factor to note is that a small handful of companies, including leading giants like Amazon, Microsoft, and Google, control a large share of the market.

This current setup could provide room for smaller, tier 2 players to enter the market and compete with some of the Magnificent 7 giants.

Cloud Computing ETFs and Market Performance

Cloud computing equities have had relatively shaky performance in the past five years, following their recent peak in around 2021.

While many high-growth themes have been going through hype cycles, with their stocks continuing to soar through 2025, cloud computing equities have moved a bit more cautiously.

One strategy to consider in the market is to take a look at some of the cloud computing ETFs, including both domestic and global cloud computing ETFs. Many of these ETFs target some of the mid-sized names in the market, instead of focusing on the existing industry giants.

The WisdomTree Cloud Computing ETF is a heavily diversified ETF that primarily focuses on US cloud computing companies. This ETF targets 68 leading companies in the industry.

The First Trust Cloud Computing ETF targets smaller and large cloud computing companies, including leading giants like Amazon, Alphabet, and Microsoft. This ETF is also a bit less diversified, as the top 10 holdings account for around 38% of its assets.

The Global X Cloud Computing ETF is another vehicle to consider for exposure to some cloud computing companies outside of the United States. This ETF also targets companies in markets like Canada, China, Israel, and Sweden.

These ETFs have had relatively weaker performance in the past five years, and could have a turnaround through the end of this decade as the industry potentially continues its growth trajectory. 

One of the reasons the First Trust Cloud Computing ETF has outperformed other cloud computing ETFs is that it also has significant exposure to leading giants like Amazon, Alphabet, and Microsoft. If you also want to target some of these large-cap companies, this ETF would be a better bet than the Global X Cloud Computing ETF and the WisdomTree Cloud Computing ETF.

For those who want to bet more on smaller players, the WisdomTree Cloud Computing ETF could be a solid bet.

Cloud computing equities have a very unique position in the market, as the industry has been growing at double-digit rates, yet equities have not had very strong performance in the past five years. While there has been a lot of hype around Mag 7 stocks and other growth themes, cloud computing stocks are uniquely positioned in the market and could break out in the coming years.

Cloud computing stocks should be on your radar if you are searching for high-growth themes that have been out of favor in the short term.