Cloud and AI Markets Show Strong Growth Potential for Investors

Cloud and AI markets are experiencing strong growth. Microsoft, Datadog, and Oracle are positioned to capitalize on this upward trend and may prove to be solid investment options.

Date: 08-02-2025

AI Rating: 7

Market Growth Overview: The report outlines positive prospects for the cloud and AI markets, which are set to grow significantly over the next decade. With a projected CAGR of 16.5% for cloud computing and 36.6% for AI, this upward trend would likely enhance stock valuations for companies involved in these sectors.

Company Analysis: The report focuses on three companies: Microsoft, Datadog, and Oracle, highlighting their growth in relation to the cloud and AI markets.

Microsoft reported a 21% year-over-year increase in cloud revenue, accounting for 59% of its total revenue. Analysts expect both revenue and Earnings Per Share (EPS) to grow at a CAGR of 14% from fiscal 2024 to fiscal 2027. Despite a valuation of 31 times forward earnings, Microsoft's leadership role in cloud and AI may support its higher price.

Datadog, which has transitioned to profitability, anticipates revenue and EPS growth of 23% and 77%, respectively. The positive shifts in its customer base and retention rates contribute to its strong outlook. It is priced at 70 times forward adjusted earnings, reflecting its growth potential despite seeming expensive.

Oracle aims for revenue growth at a rate of 12% and EPS growth of 20% from fiscal 2024 to fiscal 2027. Its focus on cloud-based services, especially following acquisitions to bolster its market presence, indicates a solid position in the cloud space. Oracle's stock is valued at 24 times forward adjusted earnings, which seems reasonable against its growth prospects.

Stocks: MSFT DDOG ORCL