The Motley Fool·2025-09-27 09:30Core Viewpoint - Cloud computing companies have significant growth potential, and identifying stocks in this sector can lead to long-term investment success [1] Group 1: Company Performance - Microsoft, Alphabet, and Amazon are identified as key players in the cloud computing space, benefiting from artificial intelligence through their cloud services [2] - Amazon Web Services (AWS) generated $30.9 billion in revenue in Q2, growing 17% year over year, and accounted for 18% of Amazon's total revenue, contributing 53% of its operating profits [5][6] - Google Cloud's revenue increased 32% year over year to $13.6 billion in Q2, with an operating margin of 21%, making it one of Alphabet's fastest-growing segments [7] - Microsoft Azure's revenue rose 39% year over year in Q4 of fiscal 2025, indicating the fastest growth among the three companies [8] Group 2: Market Trends - The cloud computing business model is straightforward: build capacity and rent it out for profit, which all three companies have successfully implemented [5] - The transition to cloud services creates high switching costs for clients, making it difficult for them to revert to on-premise solutions [10] - The cloud market is projected to grow from approximately $752 billion in 2024 to $2.39 trillion by 2030, driven by increasing workloads and AI demand [11] Group 3: Investment Strategy - Investing in Microsoft, Alphabet, and Amazon is recommended as a strategy for long-term market-beating returns due to their strong positions in the cloud computing sector [12]