The cloud computing market is thriving owing to consistently increasing hybrid work trends and growing spending on cloud services. The widespread adoption of cloud technology is fueling a digital revolution, impacting businesses and industries worldwide.

Amid this backdrop, investors could scoop up shares of fundamentally stable cloud computing stocks, ServiceNow, Inc. (NOW), Okta, Inc. (OKTA), and NetScout Systems, Inc. (NTCT).

Cloud computing has taken off in the past few years owing to its intrinsic properties that have benefited both enterprises and employees alike. Its core appeal lies in its flexibility, scalability, efficiency, cost-effectiveness, and security. These attributes are why businesses increasingly incorporate cloud services into their operations.

With hybrid work trends on a hike, cloud computing has helped organizations eliminate the capital expense of buying hardware and software and setting up and running onsite data centers. As of November 2024, at least 37% of employers have adopted a hybrid working model, boosting the demand and need for cloud services.

Moreover, Gartner (IT) forecasts that the worldwide end-user spending on public cloud services is set to reach $723.40 billion in 2025, up from $595.70 billion in 2024, underscoring the market’s growth potential.

According to a study by Fortune Business Highlights, the cloud computing market is forecasted to hit $2.29 trillion by 2032, growing at a CAGR of 16.5%. These projections are a testament to the cloud computing and services industries’ bright future.

Now, let us dive deep into the fundamentals of three cloud computing challengers that are gaining market share, starting with #3.

Stock #3: ServiceNow, Inc. (NOW)

NOW provides end-to-end intelligent workflow automation platform solutions for digital businesses. The company offers end-to-end digital transformation, artificial intelligence, machine learning, robotic process automation, process mining, performance analytics, and collaboration and development tools through its Now platform.

On September 10, NOW announced powerful data enhancements to its Now Platform aimed at unlocking value with ultra‑scale and performance. The company’s new addition to its platform, RaptorDB Pro high‑performance database, demonstrated a 53% improvement in overall transaction times, 27X faster pulling of reports, analytics, and list views, and a 3X increase in transactional throughput across workflows.

With new offerings that cater to the ever-growing data landscape, NOW is well-positioned to drive user growth in its platform and strengthen its position in the data management market.

On the same day, NOW announced plans to integrate Agentic AI into its ServiceNow platform and facilitate productivity at massive scale across use cases including IT, customer service, procurement, HR, software development, and more.

With AI integrations flooding the tech landscape, this addition could place the company as a market leader aiding its customers to apply AI agents and skills that align with its unique needs.

For the fiscal 2024 third quarter that ended September 30, NOW’s total revenues increased 22.2% year-over-year to $2.80 billion. Its non-GAAP gross profit rose 23.2% from the year-ago value to $2.31 billion. The company’s non-GAAP income from operations grew 29% from the prior year’s quarter to $872 million.

Additionally, the company’s non-GAAP net income and non-GAAP net income per share increased 28.5% and 27.4% year-over-year to $775 million and $3.72, respectively.

Analysts expect NOW’s revenue and EPS for the fiscal fourth quarter ending December 2024 to increase 21.5% and 17.4% year-over-year to $2.96 billion and $3.65, respectively. Moreover, the company topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Shares of NOW have surged 48.6% over the past six months and 57.3% over the past year, closing the last trading session at $1,091.25.

NOW’s POWR Ratings mirror its solid fundamentals. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

NOW has a B grade for growth, Sentiment, and Quality. Within the B-rated Software – Business industry, NOW is ranked #12 out of 39 stocks.

In addition to the POWR Ratings highlighted above, you can check NOW’s ratings for Value, Momentum, and Stability here.

Stock #2: Okta, Inc. (OKTA)

OKTA is an identity partner that offers products and services that are used to manage and secure identities, such as single sign-on, adaptive multi-factor authentication, API access management, access gateway, and Okta device access. The company markets its products directly to customers via its sales force and channel partners.

On October 16, OKTA announced a new Customer Identity Cloud product aimed at helping developers and organizations secure identity in GenAI applications, through secure identity standards. With the massive growth in the GenAI market, the new offering could enhance OKTA’s market position and drive user growth.

On the same day, OKTA and the OpenID Foundation announced the formation of an OpenID Foundation working group with Ping Identity, Microsoft Corporation (MSFT), SGNL, and Beyond Identity to establish a new identity security standard, the Interoperability Profile for Secure Identity in the Enterprise (IPSIE).

With the widespread use of SaaS offerings across the tech sector, the new security standard could enhance the end-to-end security of the companies’ products across every touchpoint of its technology stack.

For the fiscal 2025 third quarter that ended October 31, OKTA’s total revenue increased 13.9% year-over-year to $665 million. Its non-GAAP gross profit rose 14.4% from the year-ago value to $541 million. The company’s non-GAAP operating income grew 62.4% from the prior year’s quarter to $138 million.

Moreover, OKTA’s non-GAAP net income and non-GAAP net income per share increased 53.2% and 52.3% year-over-year to $121 million and $0.67, respectively.

The consensus revenue and EPS estimates of $669.10 million and $0.74 for the fiscal 2025 fourth quarter ending January 2025 exhibit a year-over-year rise of 10.6% and 16.9%, respectively. Additionally, the company surpassed the consensus revenue and EPS estimates in all of the four trailing quarters, which is noteworthy.

The stock has surged 9.9% over the past three months to close the last trading session at $83.28.

OKTA’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

OKTA has an A grade for Growth and Sentiment. Within the B-rated Software – Security industry, OKTA is ranked #8 out of 20 stocks.

To access OKTA’s Value, Momentum, Stability, and Quality ratings, click here.

Stock #1: NetScout Systems, Inc. (NTCT)

NTCT provides service assurance and cybersecurity solutions for digital business services to protect against disruptions. The company’s offerings include nGeniusONE management software, nGeniusPULSE, nGenius Business Analytics solution and more.

On December 19, NTCT announced the introduction of artificial intelligence (AI) and machine learning (ML) technology to its Arbor Edge Defense (AED) and Arbor Enterprise Manager (AEM) products to combat AI-enabled DDoS threats and protect critical IT infrastructure.

With the rapid rise in AI-enabled DDOS attacks, the advancement could strengthen the company’s products against these attacks and reinforce its customers’ need for protective solutions to minimize business risk.

On November 13, NTCT announced an expanded partnership with Arelion, a global connectivity solution provider. The extended partnership aims to strengthen its DDoS attack mitigation capabilities and enhance NTCT’s position in the cybersecurity market, opening its doors for future partnerships.

For the fiscal 2025 second quarter that ended September 30, NTCT’s total revenue came in at $191.11 million. Its non-GAAP gross profit and non-GAAP income from operations were reported to be $152.25 million and $44.07 million, respectively.

Additionally, the company’s non-GAAP net income and non-GAAP net income per share amounted to $33.56 million and $0.47, respectively.

Street expects NTCT’s revenue and EPS for the fiscal 2025 fourth quarter ending March 2025 to increase 9.1% and 25.5% year-over-year to $222 million and $0.69, respectively. Moreover, the company topped the consensus EPS estimates in all four trailing quarters.

Shares of NTCT have surged 1.8% over the past three months and 17.2% over the past six months, closing the last trading session at $21.49.

NTCT’s strong prospects are apparent in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

NTCT has a B grade for Growth, Value and Sentiment. It is ranked #6 out of 78 stocks within the B-rated Technology – Services industry.

Click here to access NTCT’s ratings for Quality, Stability, and Momentum.

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NOW shares were unchanged in premarket trading Monday. Year-to-date, NOW has gained 54.46%, versus a 25.54% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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