The COVID-19 pandemic accelerated the adoption of cloud services as remote work became a necessity, fueling demand for scalable and accessible solutions. Multi-cloud strategies now enable organizations to optimize operations, enhance data resilience, and reduce risks, making the cloud sector a compelling investment opportunity.

In this context, under-the-radar cloud stocks like Nutanix, Inc. (NTNX), Smartsheet Inc. (SMAR), and Sprinklr, Inc. (CXM) stand poised for growth.

In today’s tech-driven market, cloud computing replaces physical storage with accessible, cost-effective solutions for seamless data management. The public cloud services market is projected to grow by 21.5% in 2025. Gartner forecasts that by 2027, 90% of organizations will adopt hybrid cloud approaches, with data synchronization across hybrid environments emerging as a critical GenAI challenge to address.

Notably, the cloud enables businesses to adopt innovative models such as Blockchain-as-a-Service (BaaS) and supports flexible, secure, and scalable operations. Meanwhile, cloud-based applications and software services remain among the largest spending segments currently. Spending on SaaS applications is expected to reach $299.10 billion this year, up from just over $250.80 billion in 2024.

Furthermore, emerging technologies such as quantum computing and confidential computing offer scalability, resilience, and advanced security features, fostering confidence in cloud adoption and investment. Considering these favorable trends, let’s assess the fundamentals of the aforementioned cloud stocks.

Nutanix, Inc. (NTNX)

NTNX provides an enterprise cloud platform internationally. The company offers a hyper-converged infrastructure software stack, including Acropolis Hypervisor, flow virtual networking and security, Nutanix Kubernetes Engine, and Nutanix Cloud Clusters.

On November 12, 2024, NTNX announced Nutanix Enterprise AI, a unified generative AI platform deployable across on-premises, edge, and public clouds. It enables secure, efficient AI application deployment with optimized performance and a consistent multicloud operating model.

On November 7, 2024, NTNX announced an expanded strategic collaboration with AWS to simplify cloud migration and enable on-premises customers to leverage AWS services through Nutanix Cloud Clusters (NC2) on AWS. This partnership aims to accelerate digital transformation with enhanced scalability, security, and hybrid cloud capabilities.

In terms of the trailing-12-month gross profit margin, NTNX’s 85.44% is 69.6% higher than the 50.38% industry average. Its 15.07% trailing-12-month levered FCF margin is 32.5% higher than the 11.38% industry average. Additionally, its 10.07% trailing-12-month Return on Total Capital is 230.2% higher than the industry average of 3.05%.

NTNX’s revenue grew at a CAGR of 15.1% over the past three years. Similarly, its levered FCF grew at a CAGR of 21.8% during the same period.

NTNX’s total revenue for the first quarter, which ended on October 31, 2024, was $590.96 million, up 15.6% year-over-year. The company’s gross profit rose 18.5% from the year-ago value to $508.29 million for the same period. Additionally, its non-GAAP net income came in at $121.77 million, or $0.42 per share, up 43.2% and 44.8%, respectively, compared to the prior-year quarter.

For the quarter ending January 31, 2025, NTNX’s revenue is expected to increase 13.6% year-over-year to $642.08 million. Its EPS for the same quarter is expected to increase 2.4% year-over-year to $0.47. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 24.5% to close the last trading session at $62.61.

NTNX’s POWR Ratings reflect a favorable outlook. It has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

NTNX has an A grade for Growth and Quality and a B for Momentum. It is ranked #15 out of 125 stocks in the B-rated Software – Application industry. To access additional grades for NTNX’s Value, Stability, and Sentiment, click here.

Smartsheet Inc. (SMAR)

SMAR provides an enterprise platform to plan, capture, manage, automate, and report on work for teams and organizations.

SMAR’s levered FCF grew at a CAGR of 38.6% over the past three years. Similarly, its revenue grew at a CAGR of 29.1% during the same period.

In terms of the trailing-12-month levered FCF margin, SMAR’s 27.21% is 139.1% higher than the 11.38% industry average. Likewise, its 81.68% trailing-12-month gross profit margin is 62.1% higher than the 50.38% industry average. Additionally, its 0.82x trailing-12-month asset turnover ratio is 34.35% higher than the industry average of 0.61x.

In the fiscal third quarter that ended October 31, 2024, SMAR’s revenue stood at $286.87 million, up 16.7% year-over-year, and non-GAAP operating income rose 191.2% year-over-year to $56.36 million. In addition, the company’s non-GAAP net income amounted to $61.04 million and $0.44 per share, reflecting increases of 170.3% and 158.8% year-over-year, respectively.

Analysts expect SMAR’s EPS and revenue for the quarter ending January 31, 2024, to increase 0.8% and 14.9% year-over-year to $0.34 and $295.29 million, respectively. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters. SMAR’s stock has gained 49.5% over the past nine months to close the last trading session at $56.33.

SMAR’s positive prospects are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.

It is ranked #6 out of 18 stocks in the A-rated Software – SAAS industry. It has an A grade for Growth and a B for Sentiment and Quality. To see SMAR’s Value, Momentum, and Stability ratings, click here.

Sprinklr, Inc. (CXM)

CXM provides enterprise cloud software products worldwide. The company operates Unified Customer Experience Management platform, a software that enables customer-facing teams to collaborate across internal silos, communicate across digital channels, and leverage a complete suite of capabilities to deliver customer experiences.

CXM’s total assets grew at a CAGR of 4.7% over the past three years. Also, its revenue grew at a CAGR of 19.6% over the past three years.

In terms of the trailing-12-month Return on Total Capital, CXM’s 3.09% is 1.3% higher than the 3.05% industry average. Similarly, its 4.54% trailing-12-month Return on Total Assets is 123.4% higher than the industry average of 2.03%. Its 5.59% trailing-12-month net income margin is 45.9% higher than the industry average of 3.83%.

For the fiscal third quarter of 2025, which ended on October 31, 2024, CXM’s total revenue increased by 7.7% year-over-year to $200.69 million. Its non-GAAP gross profit rose by 2.2% from the prior year to $143.61 million. Additionally, the company’s non-GAAP net income and non-GAAP net income per share were $25.85 million and $0.10, respectively.

Street expects CXM’s revenue for the quarter ending January 31, 2025, to increase 3.3% year-over-year to $200.56 million. Its EPS for the quarter ending July 31, 2025, is expected to rise 47.2% year-over-year to $0.09. It surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 14.3% to close the last trading session at $8.26.

CXM’s POWR Ratings reflect its robust fundamentals. It has an overall rating of B, which translates to a Strong Buy in our proprietary rating system.

It is ranked #43 in the Software – Application industry. It has a B grade for Value and Momentum. Click here to see CXM’s Growth, Stability, Sentiment, and Quality ratings.

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NTNX shares were trading at $62.83 per share on Tuesday afternoon, up $0.22 (+0.35%). Year-to-date, NTNX has gained 2.70%, versus a -0.90% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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