Cloud computing companies have a huge growth runway.
Finding stocks that you can buy and hold forever is a smart goal. By identifying and investing in these companies, you can shift your focus to other stocks while just letting these safe choices do their thing. However, investors must identify a trend that allows these companies to succeed over the long term; otherwise, they could turn out to be losing picks.
Three stocks that I think are worth buying and holding forever are Microsoft (MSFT 0.88%), Alphabet (GOOG 0.21%) (GOOGL 0.28%), and Amazon (AMZN 0.78%). These three are all considered AI hyperscalers, but they’re benefiting from artificial intelligence (AI) through another important business segment: cloud computing.
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The boom in cloud computing
Cloud computing is a genius business model, and all three of these tech giants have a thriving operation in it. Most companies don’t want to spend huge amounts on computing power or storage. And upkeep on this equipment can be expensive and require specialists. So instead of having to build huge computing capacity, many companies choose to rent it from cloud providers like Microsoft Azure, Google Cloud, and Amazon Web Services (AWS).
The business model for cloud computing providers is extremely simple: build out capacity and rent it out for more than it costs to build and operate. All three companies have mastered this model and are seeing great results.
AWS is the largest cloud provider, although it’s growing the slowest, so that gap is closing. In the second quarter, AWS grew 17% to $30.9 billion and made up 18% of Amazon’s total revenue. However, it’s a huge income source: It generated 53% of Amazon’s total operating profits.
With AWS making up the majority of Amazon’s profits while growing faster than its e-commerce business, the cloud segment will continue to become a larger part of the parent company with each year, further transforming it from an e-commerce play to a cloud computing play.
Google Cloud was the last of the three primary cloud services to enter that arena, so it’s behind the other two. But it’s still doing phenomenally well. Its revenue increased 32% year over year to $13.6 billion in the second quarter, and its operating margin increased to 21%.
Google Cloud is one of Alphabet’s fastest-growing segments, and with huge computing demand still emerging, it’s a trend that will boost the company’s stock over the long term.
Microsoft, in second place in cloud market share with Azure, is growing the fastest of this trio. In the fourth quarter of fiscal 2025 (ending June 30), Azure’s revenue rose 39% year over year.
Unfortunately for investors, Microsoft doesn’t break out the exact revenue total for this division, so investors are kept guessing how much it generates. However, we still know it’s less than AWS, as the divisions that Azure is within (Intelligent Cloud) produced $29.9 billion in revenue, below AWS’ total. Still, with continued elevated growth, Azure could surpass AWS as the cloud computing leader soon.
Cloud computing is a quickly expanding business
Clearly, cloud computing is doing well right now, but will that continue?
Once a company has moved to the cloud, it’s hard to go back. This creates high switching costs for clients, essentially locking them in for the foreseeable future. Furthermore, cloud computing is a huge part of how AI is being deployed. Few companies are building AI capacity on-premise, and these three are building huge AI data centers to meet computing demand from their clients.
With two major tailwinds blowing in cloud computing’s favor (general workloads and AI workloads), it’s no surprise that third-party market projections think the business will soar over the next few years. Grand View Research estimates that the cloud market in 2024 was about $752 billion. However, it’s expected to rise to $2.39 trillion by 2030.
That’s monster growth, and because companies are always launching new workloads, it means continued growth even after these five years.
Cloud computing is an excellent segment to invest in, and this trio is the best way to do it. I think buying all three and holding them forever is a smart idea since they have what it takes to provide long-term market-beating returns.
Keithen Drury has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.