The Year Cloud Computing Took Off
Tech stocks may be crashing, nevertheless tech spending is on track to rise 3% to $3.6 trillion this year, according to new data compiled by Gartner, a innovation research firm.
While the overall gain -- just 3% -- is paltry compared to rising healthcare spending, a closer look at the numbers reveals anyway one pocket of strength: cloud computing services.
Organizations are on track to spend more than $109 billion on cloud computing, up 20% over last year. And that's not all. Gartner says the total outlay for cloud services could near double, to $207 billion, by 2016. Install-and-upgrade software and infrastructure is becoming less popular by the day, it seems.
Yet there's as well troubling news in the numbers. Spending on telecommunications services will rise just 1.4%, Gartner estimates, to $1.69 trillion. That's a big number, I realize, however investors are rightly focused on the growth rate. Slower spending in this sector has battered the shares of infrastructure suppliers just as Acme Packet and Riverbed Research .
Both stocks are down more than 40% year-to-date versus a 10% gain for the Nasdaq Composite. Acme Packet, in particular, preannounced but another revenues miss last week, as the company continues to work through problems selling to domestic carriers that supply the majority of its revenue.
Three things you can do right now We know to be careful investing in telecom. However how should investors react to increased spending on cloud services? I'd suggest betting on the top services in their respective niches, which aren't dependent on the goodwill of others in order to win business. Here are three I like right now:
Cloudy with a chance of billions It's no secret that Fool co-founder David Gardner was an early believer in the cloud computing movement. Thousands of Motley Fool Rule Breakers members have profited as a result. Want his then and there Big Idea? Click here for a 30-day free trial subscription to Rule Breakers.
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