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The Case For Cloud Computing

The Blue Water Team

Cloud computing, defined as the ability to store and then deliver information on demand via the Internet, is quickly becoming an integral part of both the technology world and of daily life. In this article, Wisdom Tree examines the advances cloud computing is likely to make as artificial intelligence (AI), the Internet of Things (IoT) and remote work become more ubiquitous in everyday life. 

Cloud computing consists primarily of three services designed to offer resources and support over a network (i.e. "the cloud"). These services are the following:

  • Software-as-a-Service (SaaS)

SaaS makes software available over a network rather than as a product installed on a physical device.

  • Platform-as-a-Service (PaaS)

PaaS refers to the creation of a network-based environment for software development. 

  • Infrastructure-as-a-Service (IaaS)

IaaS refers to IT services, resources, and support provided over a network

While all three of these areas are made possible by cloud computing, it is SaaS that benefits the most. In particular, SaaS can deliver services to clients in the following advantageous ways:

  • More quickly and efficiently
  • For lower costs
  • In a scalable format

SaaS businesses also realize benefits for themselves, including the following:

  • Reliable monthly revenue from software subscriptions
  • Client retention
  • Fewer R&D expenses

Cloud computing's success and ongoing growth make it a smart addition to investors' portfolios. The field's 12-month weighted gross margin averages and revenue averages outperform other options, including the S&P 500. As a result, cloud computing has the potential to deliver more favorable results than does investment in more traditional areas of technology. 

We maintain a list of cloud computing investing ideas.