The cloud-computing sector has been one of the strongest performers of the year so far, as the coronavirus outbreak and the shift to remote work forced businesses and organizations around the world to adapt and move their computing operations onto the cloud.
Not surprisingly, cloud-related ETFs are trading near their best levels on record, with the First Trust Cloud Computing ETF (NASDAQ:) and the Global X Cloud Computing Fund (NASDAQ:) up around 32% and 47% respectively year-to-date.
Below we highlight three of the best-performing names in the high-flying, cloud-based tech sector. Each will enjoy accelerating earnings and revenue growth thanks to robust demand for their innovative products.
Each is also well worth considering ahead of their upcoming quarterly reports, as increased internet traffic, surging levels of media consumption and booming e-commerce activity are expected to have boosted their respective results.
1. Fastly: Reports August 5 After Markets Close
Fastly (NYSE:) has seen its shares significantly outperform the broader market this year, soaring a whopping 478% in 2020, as investors have become increasingly bullish on the online content delivery network specialist.
The San Francisco, California-based cloud-computing company, which went public in May 2019, helps other businesses speed up their websites, apps, video and streaming offerings on mobile devices. Fastly currently counts big names like video-sharing app TikTok, e-commerce giant Shopify (NYSE:), music-streaming service Spotify (NYSE:) and messaging app Slack (NYSE:) as customers.
The stock hit an all-time high of $116.28 on Tuesday, before ending at $116.18, giving the fast-growing tech company a market cap of around $11.9 billion.
Fastly—which reported at the beginning of May—next reports earnings after Wednesday’s closing bell.
Consensus calls for a loss of $0.01 per share for the second quarter, narrowing from a loss of $0.16 per share in the year-ago period. Revenue is anticipated to surge 54% from the same period a year earlier to $71.4 million, reflecting powerful demand for its cloud-based services during the coronavirus lockdown.
In addition to the top- and bottom-line numbers, investors will focus on Fastly’s update regarding its outlook for the rest of the year and beyond. The company raised its full-year revenue guidance to a range of between $280 million to $290 million in its last quarter, up from a previous forecast for sales between $255 million and $265 million, citing continued customer expansion on its platform.
2. Cloudflare: Reports August 6 After Markets Close
Cloudflare (NYSE:) shares have more than doubled so far this year, rallying 148%, as it benefits from strong demand for its cloud-based networking and cybersecurity services due to the spike in internet traffic amid the ongoing COVID-19 pandemic.
The San Francisco, California-based company, which provides web security and infrastructure services, protects and facilitates operations for more than 27 million websites and applications worldwide. According to recent research from Morgan Stanley, approximately 10% of the Fortune 1,000 are paying customers and 10% of the top million websites use at least one Cloudflare solution.
The stock reached a record level of $42.82 yesterday before closing at $42.31, giving it a market cap of about $12.9 billion.
Cloudflare, whose earnings and in the first quarter, is projected to report second quarter results on Thursday, August 6 after the close. Consensus estimates call for the network security firm to post a loss of $0.06 per share, while revenue is forecast to total $94.1 million, improving from sales of $91.2 million in the preceding quarter.
Beyond EPS and revenue figures, investors will be keen to hear further details on its recently-launched serverless cloud-computing platform called Workers Unbound, which aims to be cheaper and faster than competitors’ platforms including from Amazon’s (NASDAQ:) Web Services, Microsoft’s (NASDAQ:) Azure and Google’s (NASDAQ:) Cloud.
3. Fortinet: Reports August 6 After Markets Close
Cybersecurity specialist Fortinet (NASDAQ:) has seen its shares soar throughout the coronavirus crisis, rallying an eye-popping 97% since its bear market low in late March. The cloud-based information security specialist has benefitted from increasing demand for its services as the pandemic sped up enterprise digitization trends.
The stock closed at $138.83 last night, within sight of a record high of $151.84 touched on July 9. At current levels, the Sunnyvale, California-based company has a valuation of roughly $22.4 billion.
Fortinet, whose earnings and revenue easily in the first quarter, is projected to report second quarter results on Thursday, August 6 after the close.
Consensus estimates call for earnings of $0.65 per share, which would indicate a YoY EPS growth rate of 12%. Revenue is expected to increase roughly 15% from the same period a year earlier to $599 million, as the shift many companies made to have employees work-from-home created soaring demand for its security solutions.
Perhaps of greater interest, investors will keep an eye on growth rates in Fortinet’s services segment, which includes offerings such as FortiGuard security subscriptions and FortiCare technical support. Wall Street analysts are projecting services revenues of $395 million for the quarter, indicating a YoY increase of 19%.