Larissa James writes: In case you haven’t been paying attention to technological innovations over the past decade, now is the time to understand cloud computing and the potentially lucrative returns an investment in industry stocks can produce. With cloud computing expected to see tremendous growth in the coming years and months, it would be wise to do your research and find the right stocks for your portfolio. Thankfully, though, we’ve done some of the work for you and can point you in the right direction.

Cloud Computing Demands Your Attention

According to CBT Nuggets, a company that trains IT’s in cloud computing, “The term ‘cloud’ refers to the practice of hosting data, memory, process power, and apps in remote data centers.” In other words, cloud users retain access to internet services without the need for the traditional physical infrastructure. It essentially allows businesses to cut the cord without losing access to the resources they need to thrive.

Okay, that’s all good and well, but why is the cloud industry worth investing in? Well consider that 42 percent of IT decision makers are planning to increase their spending on cloud computing this year. When you look at the biggest spenders – enterprises with more than 1,000 employees – 52 percent of decision makers are expecting to increase spending. From 2013 to 2018, cloud computing infrastructure and platforms are expected to grow at a 30 percent CAGR. This comes at a time when overall enterprise IT is only predicted to grow by five percent. Outside of cyber security, cloud computing is the top initiative of forward-thinking IT executives over the remainder of 2015.

In Q3, 2014, Microsoft saw it’s commercial cloud revenue grow by an impressive 128 percent – and they were essentially a late arriver in the industry. All major technology companies, including Microsoft, IBM, and Amazon have their feet firmly planted in the cloud industry, which indicates this isn’t some passing trend.

While you can look at all of the wonderful things about cloud computing – including enhanced security, increased reliability, better organizational visibility, effortless collaboration, etc. – and come away impressed, the real value comes when you see how the marketplace is responding. Traditional models that have been in place for years are now dying away. CD’s and DVD’s are close to becoming extinct. Adobe now distributes and sells all software solutions online. Physical backup solutions are very rare now, with virtually all providers moving to the cloud.

Some Cloud Stocks to Consider

The future is bright for cloud computing, and all signs indicate nothing but steady growth ahead. As an investor, are you ready to follow the numbers? Here are a few cloud stocks to consider:

Microsoft. If anyone seems to be taking the lead in the cloud industry, it’s Microsoft. In 2014, the software giant netted a cool $6.3 billion in annual revenues, which likely contributed to the company’s six percent year-on-year revenue growth. It doesn’t appear that anything will slow down this growth, making it a profitable place to store your money.

Avago Technologies. While the name may not ring as familiar as Microsoft, Avago Technologies is currently one of the best cloud stocks to invest in. “Avago's financials show that the company is really starting to grow its balance sheet as well. In the first quarter of 2015, it grew revenue 130.1% to $1.6 billion,” writes Jim Bach of Money Morning. Not only is Avago one of the best cloud stocks to invest in, many believe it’s one of the best technology stocks, period.

IBM. Never count IBM out. Just last year, the company invested $1 billion into a new Watson super-computer and committed $3 billion to growing the Internet of Things. Even for IBM, a $4 billion investment in big data shows that it’s serious about the future of cloud computing. In Q4, 2014, IBM generated $7 billion in total cloud sales (which was a 60 percent year-over-year improvement).

While there are plenty of cloud stocks to keep an eye on, these are three of the more lucrative opportunities for the time being. Whatever you do – don’t underestimate the power of the cloud.

© 2015 Copyright Larissa James - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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