Oracle stock has fallen more than 60% from its 52-week high. Cloudflare just set a new one. Both are cloud companies, and both are growing revenue by double digits. The best cloud computing stocks right now include Alphabet, Microsoft, Amazon, Oracle, ServiceNow, Cloudflare, Datadog, and Snowflake, based on cloud revenue growth, margin direction, and how each company pays for its build-out.
That gap is the whole story in cloud right now. The market has stopped paying for cloud growth by itself. It now separates the companies writing enormous checks for AI data centers from the companies collecting revenue when those data centers get used. We screened more than 30 US-listed cloud companies and narrowed the list to eight.
How We Picked These Stocks
More than 30 companies on US exchanges earn most of their money from cloud software or cloud infrastructure. We required cloud revenue growth above 20% in the most recent reported quarter and a market cap above $10 billion. Cloud had to be a primary revenue driver, not a side project. We also required operating margins that are positive or clearly improving. (Operating margin is the profit left from each sales dollar after the costs of running the business.)
We excluded companies growing under 20%, which removed several large legacy software names. Two picks here are not yet profitable under standard accounting rules, and we flag that in each write-up rather than hide it. The result is eight companies that sit at different points on the same AI spending chain.
The Eight Best Cloud Computing Stocks
Alphabet (NASDAQ:GOOGL)
Why it made the list: Alphabet runs the fastest-growing large cloud business in the market. Google Cloud revenue reached $20.0 billion last quarter, up 63% from a year earlier. More importantly, the segment stopped being a money pit. Cloud operating income hit $6.6 billion, a 32.9% margin, up from 17.8% a year ago.
The bull case: Google Cloud's backlog passed $460 billion and nearly doubled in a single quarter. (Backlog is contracted revenue the company has signed but not yet delivered.) Roughly half converts to revenue within 24 months, so the growth is largely booked already.
The risk: Alphabet raised $80 billion in equity capital in June to help fund a capital spending budget of $180 billion to $190 billion. That is real dilution and real depreciation landing on future earnings.
Key number: Google Cloud's operating margin nearly doubled year over year, to 32.9%.
Microsoft (NASDAQ:MSFT)
Why it made the list: Microsoft is the largest cloud business in the world by revenue. Microsoft Cloud brought in $54.5 billion last quarter, up 29%, and Azure alone grew 40%. Total company revenue rose 18% to $82.9 billion, with $31.8 billion in net income.
The bull case: Commercial remaining performance obligations reached $627 billion. (Remaining performance obligations, or RPO, is the total value of contracts signed but not yet recognized as revenue.) Strip out OpenAI entirely and that figure still grew 26%, which means the core enterprise business is compounding on its own.
The risk: Microsoft plans to spend roughly $190 billion on capital projects in calendar 2026, well above what analysts had modeled. The stock trades about 30% below its 52-week high because investors are pricing that spending against the cash profit it produces.
Key number: Azure grew 40% year over year, its fastest rate in more than two years.
Amazon (NASDAQ:AMZN)
Why it made the list: Amazon Web Services is still the largest cloud infrastructure provider, at roughly 30% global share. AWS revenue was $37.6 billion last quarter and grew 28%, its fastest pace in 15 quarters. AWS carries a $364 billion backlog, and Amazon disclosed a further commitment near $100 billion from AI customers on top of it.
The bull case: AWS generated $14.2 billion in operating income on that revenue, a 37.7% margin. It remains one of the most profitable businesses of its size anywhere, and reacceleration after two years of slowing growth is the cleanest signal on the list.
The risk: Free cash flow over the trailing twelve months collapsed to $1.2 billion, down 95%, while long-term debt jumped from $65.6 billion to $119.1 billion in one quarter. Headline profit also included a $16.8 billion one-time gain on Amazon's stake in Anthropic, which is a paper mark, not cash.
Key number: AWS operating income of $14.2 billion in a single quarter, at a 37.7% margin.
Oracle (NYSE:ORCL)
Why it made the list: Oracle has the most extreme growth and the most extreme risk in cloud. Oracle Cloud Infrastructure revenue grew 93% to $5.8 billion in the most recent quarter. Full-year cloud revenue rose 39% to $34.0 billion, and total revenue grew 17% to $67.4 billion. It is on this list as a high-risk value candidate, not a safe one.
The bull case: Oracle's remaining performance obligations reached $638 billion, up 363% in a year. Management guides to $90 billion in total revenue for the current fiscal year. If even a fraction of that backlog converts on schedule, the stock is priced for a disaster that does not arrive.
The risk: S&P Global cut Oracle's credit rating to BBB-, one notch above junk status, citing customer concentration and cash burn. Roughly half of the backlog traces to a single customer, OpenAI, and Oracle is guiding to a free cash flow deficit near negative $42 billion this fiscal year. (Free cash flow is the cash left after operating costs and capital spending.) If that one customer stumbles, the backlog and the balance sheet both break.
Key number: A $638 billion backlog against a projected negative $42 billion in free cash flow.
ServiceNow (NYSE:NOW)
Why it made the list: ServiceNow is the rare cloud company growing above 20% while already profitable. Subscription revenue grew 22% to $3.67 billion last quarter, with $469 million in net income and $1.67 billion in free cash flow. The stock trades roughly 50% below its 52-week high anyway.
The bull case: Current remaining performance obligations grew 22.5% and renewal rates sit near 97%. Management also raised its full-year AI revenue target from $1 billion to $1.5 billion in a single quarter. The numbers are accelerating while the multiple compresses.
The risk: ServiceNow charges per seat, and the market is betting that AI agents shrink seat counts. That fear is not yet visible in the results, but it is what the multiple reflects.
Key number: A 32% non-GAAP operating margin alongside 22% subscription growth.
Cloudflare (NYSE:NET)
Why it made the list: Cloudflare sits between users and AI applications, and it charges based on usage. Revenue grew 34% to $639.8 million last quarter. Customers spending over $100,000 a year reached 4,416, up 25%, and now drive 72% of revenue.
The bull case: Cloudflare is building the toll booth for AI traffic. Its Pay Per Crawl product charges AI companies to access publisher content, and starting September 15 the company blocks mixed-use crawlers by default on ad-supported pages. Customers spending over $5 million a year grew 50%.
The risk: Cloudflare is not profitable under standard accounting rules, posting a $22.9 million net loss, and gross margin fell 470 basis points year over year. It cut 20% of its workforce in May, roughly 1,100 people, with charges of $140 million to $150 million still to land.
Key number: 4,416 customers paying more than $100,000 a year, up 25%.
Datadog (NASDAQ:DDOG)
Why it made the list: Datadog monitors cloud applications and bills by consumption, so its revenue rises as AI workloads run. It crossed $1 billion in quarterly revenue for the first time, growing 32%, and it did so while GAAP profitable with $52.6 million in net income.
The bull case: Net revenue retention moved up to the low 120s. (Net revenue retention measures how much more existing customers spend this year versus last, so anything above 100% means the customer base grows itself.) Free cash flow was $289 million, a 29% margin, and management guides to $4.30 billion to $4.34 billion for the year.
The risk: Concentration. Management applied extra conservatism to its single largest customer in the current quarter's guidance, which signals that one AI-native account carries real weight in the numbers.
Key number: $1.006 billion in quarterly revenue, up 32%, the first quarter above $1 billion.
Snowflake (NYSE:SNOW)
Why it made the list: Snowflake stores and queries the enterprise data that AI models need, and it bills by consumption. Product revenue grew 34% to $1.33 billion last quarter, accelerating from 30%. Remaining performance obligations rose 38% to $9.21 billion.
The bull case: Net revenue retention is 126%, meaning existing customers spend 26% more than they did a year ago without Snowflake selling anything new. The company raised full-year product revenue guidance to $5.84 billion and signed a $6 billion, five-year infrastructure agreement with AWS, its largest deal ever.
The risk: Snowflake lost $295.6 million last quarter and does not expect to reach GAAP profitability until late in its fiscal 2028. Investors are paying a high multiple for growth that must stay above 30%.
Key number: 126% net revenue retention, with 779 customers spending over $1 million a year.
The Cloud Sector Right Now
Amazon, Microsoft, and Google together control about 68% of enterprise cloud spending, with AWS near 30% share, Azure near 25%, and Google Cloud near 13%. Those shares have barely moved. What changed is the cost of defending them. All three are spending record sums on AI data centers, and all three are now funding that spending with outside money rather than operating cash. Amazon raised $25 billion in bonds plus a $17.5 billion term loan in June. Alphabet raised $80 billion in equity the same month.
That is why the market split cloud into two groups. Companies that pay for AI capacity now get judged on debt and depreciation. Oracle is the clearest example, sitting near a 52-week low with a credit downgrade despite 93% infrastructure growth. Companies that get paid when AI capacity is used, including Cloudflare, Datadog, and Snowflake, trade within a few percent of 52-week highs. The same force lifted our best semiconductor stocks list and pressured parts of the best tech stocks group.
The third group is the argument. Seat-priced software like ServiceNow keeps beating estimates while its multiple falls, because investors expect AI agents to replace the seats. IBM's preliminary second-quarter revenue of $17.2 billion came in below expectations, with a warning that AI hardware spending is squeezing software budgets. That thesis is a forecast, not yet a result. Our best AI stocks guide covers the model layer sitting above all of this.
What to watch:
- Second-quarter earnings across the group: Alphabet and ServiceNow report July 22, Microsoft July 29, Amazon July 30, and Cloudflare and Datadog August 6. Cloud growth rates and capital spending guidance will either confirm or break the split.
- Oracle's funding path: With a BBB- rating and a projected negative $42 billion free cash flow year, how Oracle finances its build-out matters more than its backlog.
- Evidence on seat-based pricing: ServiceNow's renewal rate and seat counts are the cleanest test of whether AI agents actually shrink software spending, or whether that fear is priced and wrong.
Bottom Line
Cloud is no longer one trade. Investors who want growth with the least balance sheet risk should look at the consumption-priced names. Revenue there rises with AI usage, and there is no data center to fund. Investors who want scale and cash profit get it from Alphabet, Microsoft, and Amazon, but they buy the capital spending with it. Oracle is the one bet here that depends on a single customer.
Frequently Asked Questions
What are the best cloud computing stocks?
The best cloud computing stocks include Alphabet, Microsoft, Amazon, Oracle, ServiceNow, Cloudflare, Datadog, and Snowflake. Alphabet posts the fastest growth among the large clouds at 63%. Amazon's AWS is the most profitable, at a 37.7% operating margin. Snowflake and Datadog offer the purest exposure to AI usage, because they bill by consumption rather than by seat.
Which cloud provider is the biggest?
Amazon Web Services is the largest cloud infrastructure provider with roughly 30% of the global market, followed by Microsoft Azure near 25% and Google Cloud near 13%. Together the three control about 68% of enterprise cloud spending. By revenue, Microsoft Cloud is the single largest cloud business at $54.5 billion in its most recent quarter, though that figure includes software products beyond infrastructure.
Why is Oracle stock down so much?
Oracle stock fell after S&P Global cut its credit rating to BBB-, one notch above junk status. The downgrade cited customer concentration and cash burn from Oracle's AI data center build-out. Roughly half of the company's $638 billion backlog is tied to OpenAI, and Oracle projects a free cash flow deficit near negative $42 billion this fiscal year. The business is still growing, with cloud infrastructure revenue up 93%, but investors are pricing the funding risk rather than the growth.
Is Snowflake or Datadog the better AI cloud stock?
Datadog is profitable and Snowflake is not, which is the main difference. Datadog earned $52.6 million last quarter on $1.006 billion of revenue growing 32%. Snowflake grew product revenue 34% to $1.33 billion but lost $295.6 million and does not expect GAAP profitability until late fiscal 2028. Snowflake has higher net revenue retention at 126% versus Datadog's low 120s, so it converts existing customers into growth slightly faster.
Do cloud computing stocks pay dividends?
Most do not. Microsoft, Oracle, and Alphabet all pay a dividend, though the yields are small. Amazon, ServiceNow, Cloudflare, Datadog, and Snowflake pay nothing and reinvest all cash into growth and capacity. Cloud is a growth category, so investors buying for income are generally better served elsewhere.
