Wedbush Says COVID-19 Driving 'Massive' Shift to Cloud Computing; Sees $1 Trillion in Cloud Spending Over Next Decade
MT NEWSWIRES 1:55 PM ET 3/27/2020
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01:55 PM EDT, 03/27/2020 (MT Newswires) -- The COVID-19 outbreak has further catalyzed the "massive shift" to cloud computing, according to Wedbush Securities.
The transition in the past few years has now become the "'hearts and lungs' core technology and infrastructure" that has allowed companies and governments across the globe to maintain smooth operations at a time when everyone is staying at home, the firm said.
Wedbush said that the back-end public or hybrid cloud giants such as Amazon(AMZN) , Microsoft(MSFT) and Alphabet (GOOGL) unit Google are the ones facilitating virtual offices and communications globally, while also acknowledging frontliners enabling collaboration and functionality for consumers and enterprises worldwide, namely Zoom Video Communications(ZM) , Citrix(CTXS) , Microsoft's(MSFT) Teams and Slack (WORK).
More specifically, Wedbush analysts led by Daniel Ives said they estimate that about 33% of workloads are currently sitting in the cloud, and that organizations that have successfully transitioned to the cloud are experiencing relatively smooth transition periods in the last couple of weeks.
According to the analysts, several sales people or vendors are seeing cloud migrations and cloud infrastructure projects being expedited and approved ahead of schedule, as businesses find themselves "caught flat footed with a lack of cloud enabled functionality."
With this in mind, the firm believes the COVID-19 pandemic will further drive cloud deployments among enterprises, and that its long standing projections of moving from 33% of workloads in the cloud to 55% by 2022 are starting to look conservative.
According to Wedbush, these targets could be achieved a full year ahead of expectations, if this current pace continues.
The firm is expecting about a trillion dollars of cloud spending over the next decade, with several groups across the technology landscape standing to benefit, such as cybersecurity, data center plays, cloud enablers, hybrid cloud and applications.
Microsoft (MSFT) and Amazon(AMZN) are two of the core vendors that Wedbush expects will continue to witness an acceleration of cloud
infrastructure spending during and after the COVID-19 pandemic is resolved.
Microsoft (MSFT), according to the firm, continues to stand out among the tech names, as most of its revenue and 80% to 90% of the company's revenue is based on Azure, Office 365 and core enterprise driven franchise.
"MSFT at these levels we view as a golden cloud tech name to own for those willing to navigate the volatility of this 'shock event' and see the forest through the trees," Wedbush analysts said.
"We also believe that a surge of strategic and financial buyer driven cloud M&A could be on the horizon over the coming months as valuations start to reach levels which can ignite a long overdue deal frenzy that could start to put a floor on the software sector as well."
The firm expects Microsoft(MSFT), Google, IBM(IBM) , Adobe (ADBE), Salesforce (CRM), and Oracle (ORCL) to be among some of the strategic players that plan to expand their cloud portfolios over the next year. |
