To overcome the short-term impact of an economic recession, which historically has been just a temporary disruption, investors should focus on the attractiveness of investment opportunities arising from the current environment to achieve superior long-term performance. In today’s world, digital infrastructures and smart work arrangements are becoming vital for companies that want to operate efficiently amid the global shutdown. The current trend has the potential to reinforce the long-term paradigm shift towards digital services such as Cloud solutions, data storage and data processing.
Bloomberg- The Cloud service market size currently estimated at $264.8billion is projected to reach $927.51billion by 2027, rising at a CAGR of 16.4% between 2020 and 2027. Meanwhile, spending on Cloud computing reached a record high in Q4 2019 globally compared to the same period in 2018, with few established Companies dominating the worldwide market: Amazon’s AWS, Microsoft’s Azure, Alphabet’s Google Cloud, IBM Cloud and Alibaba.
E-commerce giant Alibaba recently announced the plan to invest $28billion (200billion yuan) over the next three years to reinforce its position in the Chinese Cloud market. According to Reuters, Alibaba already controls 46.4% of the Chinese Cloud market share. The Cloud division has become one of Alibaba’s fastest growing initiatives: revenue in 2020 rose 62% to 10.7billion yuan ($1.54billion) from the last quarter 2019.
It is interesting to note that despite none of these companies were born as a Cloud company service, they are now positioning themselves to benefit from the unprecedented opportunities provided by the digitalization of business services within all productive sectors. As the digitalization process continues across sectors, the Cloud business can become a major long-term growth driver for Companies which are able to secure a competitive advantage and build barriers to entry. A selective, active investment strategy can be the most appropriate way to benefit from such a long-term investment opportunity.
The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. Â It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.