The tech industry has been one of the only sectors that has been only minimally impacted by the coronavirus pandemic financial crisis that struck the market in late March. The tech heavy Invesco QQQ (NASDAQ: QQQ), which tracks the Nasdaq-100 index, is up 36% for the year and continues to climb as tech stocks are usually less indebted than the broader market due to their ability to adapt quickly and requiring less physical infrastructure. The QQQ has also gained due to the popularity of the market's new favorite tech sector: cloud computing.
Cloud computing stocks have exploded recently due to the workforce's need to adapt to remote workplaces in response to coronavirus pandemic related shutdowns and stay-at-home orders. The shift to decentralized workforces has created an overwhelming need for digitized operations and tools that enable virtual connectivity and functionality to keep businesses moving. That is where cloud computing steps in.
The cloud computing industry is made up of a range of companies, with big tech mainstays and niche ventures alike. The cloud contains three main services: software-as-a-service (SaaS), which handles web-based applications; infrastructure-as-a-service (IaaS), which gives Internet-based access to storage and computing powers; and platform-as-a-service (PaaS), which gives developers tools to build and host web based content.
The sector's biggest players are Amazon's AWS (NASDAQ: AMZN), Microsoft's Azure (NASDAQ: MSFT), Alibaba Cloud (NYSE: BABA), and Google Cloud Platform (NASDAQ: GOOGL). Away from big tech, other disruptive cloud computing companies include IBM (NYSE: IBM), NetApp (NASDAQ: NTAP), Oracle (NYSE: ORCL), Salesforce (NYSE: CRM), Twilio (NYSE: TWLO), and many others.
Trading on the cloud can also be simpler with exchange-traded funds, but its important to note that not all cloud ETFs are the same:
Global X Cloud Computing ETF (NASDAQ: CLOU)
CLOU provides exposure to companies that are positioned to benefit from cloud computing adoption. This fund's top ten holdings include Twilio, Zoom Video (NASDAQ: ZM), Everbridge (NASDAQ: EVBG), Shopify (NYSE: SHOP) and Workday (NASDAQ: WDAY). The fund is up over 23% for the year. CLOU is up over 30% for the year.
First Trust Cloud Computing ETF (NASDAQ: SKYY)
SKYY tracks an all stocks that fall into any one of three cloud computing sub-groups: infrastructure, platform and software. The fund's top holdings include big tech companies like Amazon, Microsoft and Alphabet, as well as VMware (NYSE: VMW), MongoDB (NASDAQ: MDB) and Arista Networks (NYSE: ANET). SKYY is up over 23% for the year.
WisdomTree Cloud Computing Fund (NASDAQ: WCLD)
WCLD tracks an equally-weighted index of U.S. companies mostly focused on cloud software and services. The fund holds smaller firms like Datadog (NASDAQ: DDOG), DocuSign (NASDAQ: DOCU), Crowdstrike (NASDAQ: CRWD), as well as giants like PayPal (NASDAQ: PYPL) and Adobe (NASDAQ: ADBE). Newbie WCLD is up 36% for its year-to-date.