Is the Cloud a Good Investment?

is the cloud a good investment

The cloud has emerged as one of the hottest investment opportunities in recent years. As more businesses shift their data and computing needs to remote servers accessible via the internet, cloud computing providers have seen a surge in demand. But is the cloud really a good long-term investment? Let’s take a closer look.

What is the Cloud?

Cloud computing refers to the delivery of computing services like data storage, databases, networking, analytics, and more over the internet (“the cloud”). Rather than hosting apps and data on an individual company’s own servers and computers, cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud offer access to virtually unlimited computing power and storage on a pay-as-you-go basis.

Why are Investors Choosing Cloud Investments?

The shift to the cloud offers investors exposure to one of the fastest-growing markets in tech. Cloud computing allows companies to avoid costly hardware and IT staffing expenses while rapidly scaling resources up or down as needed. This operational agility and cost savings have driven rapid cloud adoption across industries. With the global cloud computing market expected to grow at over 15% annually to reach $1.5 trillion by 2030, investors are pouring money into both leading cloud providers and innovative cloud-based companies.

Cloud Computing Market Size and Growth

  • The global public cloud services market is expected to grow by 21.7% to reach $597.3 billion in 2023.
  • The cloud applications market is valued at over $153.6 billion as of 2023 and is projected to reach $168.6 billion by 2025.
  • Public cloud services spending was estimated to reach almost $600 billion in 2023, with SaaS accounting for around $195 billion.

Enterprise Cloud Adoption

  • 98% of enterprises use a multi-cloud infrastructure provider strategy, with cost optimization being a major driving factor.
  • 67% of large companies and 38% of small companies adopted one or more cloud services (IaaS, SaaS, PaaS) in 2022, attributed to increased remote work.
  • 91% of companies are investing in AI initiatives with data management on the cloud.

Cloud Data and Storage

  • 60% of the world’s corporate data is stored in the cloud.
  • It’s estimated that 200 zettabytes (2 billion terabytes) of data will be stored in the cloud by 2025.
  • Finance and accounting records are the most common type of sensitive corporate data stored in the public cloud (55%).

Cloud Spending and ROI

  • SMEs spent 47% of their technology budgets on cloud services in 2022, expected to surpass 50% in 2023.
  • 49% of business leaders cite measuring value as a major barrier to achieving cloud ROI.
  • 24% measure cloud value in terms of faster innovation and delivery.

These statistics highlight the rapid growth and adoption of cloud computing across enterprises, driven by factors like cost optimization, scalability, and enabling technologies like AI and data analytics. However, concerns around security, ROI measurement, and managing cloud spending remain challenges.

Why is the Cloud Important to AI?

Artificial intelligence (AI) and machine learning workloads require immense computing power to train models on massive datasets – making the cloud a perfect fit. All major cloud providers now offer specialized AI and machine learning platforms, tools, and services. As businesses invest more in AI, their cloud spending is expected to accelerate. Many cutting-edge AI companies build their technologies on top of cloud infrastructure, creating investment opportunities.

Is AI Cloud Investing Risky?

Like any emerging market, cloud and AI investments carry risks. The field is extremely competitive with Amazon, Microsoft, and Google battling for market share. Missed expectations, cybersecurity breaches, or recessions impacting enterprise spending could punish cloud stocks. AI companies often trade at premium valuations based on high growth projections, adding volatility risk. However, the transformative potential of these technologies means returns could be exponential for successful companies.

Who is NextGen Cloud?

NextGen Cloud is a first-mover cloud investment firm commanding a global presence with an early advantage in Europe. The firm has built one of the largest GPU fleets on the continent, including in-demand NVIDIA H100 chips. NexGen Cloud is on a mission to democratize accelerated computing accessibility worldwide by building a greener, safer, and more affordable cloud powered 100% by renewable energy.

NexGen Cloud offers two primary products:

  • Hyperstack: A European GPU-as-a-Service cloud platform providing enterprise-grade infrastructure 75% more cost-effectively.
  • InfraHub: An API allowing customers and partners to build, manage, and maintain their cloud assets.

NexGen Cloud is an NVIDIA Elite Partner, working with top suppliers to deliver cutting-edge, in-demand infrastructure through its user-friendly Hyperstack platform.

What’s New Capital Link’s Relationship to NextGen Cloud?

New Capital Link is one of a handful of elite introducers NextGen Cloud chose to raise capital on their behalf. New Capital Link’s proven track record and deep network of investors focused on alternative and disruptive assets make it a trusted partner for NextGen Cloud’s capital-raising activities.

What kind of returns are expected from cloud investments?

Projected returns on early-stage cloud investments can be between 5-10x over a 3-5 year horizon based on historical data and exit assumptions. However, returns will vary based on factors like company performance, market conditions, valuation metrics, and investor timing. While high-risk, the upside potential of backing a future cloud unicorn drives investor appetite.

Why are Cloud Investments Outperforming Traditional Investments?

In the low interest rate environment of the past decade, cloud computing stocks have dramatically outperformed traditional public markets and assets like bonds. Leading cloud stocks like Amazon, Microsoft, and Nvidia have returned over 1000% in the past 10 years. While past performance doesn’t guarantee future results, the cloud’s disruption of multiple industries points to sustained demand. As interest rates rise, cloud stocks may become more fairly valued – but their growth trajectory arguably justifies a premium.

Cloud Applications’ Clients

While hyperscale providers like AWS, Azure and Google Cloud serve major enterprises, cloud computing is applied across industries from AI and deep analytics to video rendering, medical imaging, computer-aided engineering, and material science. NextGen Cloud’s GPU cloud power can be tailored to any workload, providing affordable yet highly efficient accelerated computing.

Alternative Investment Specialist London

New Capital Link is a London-based alternative investment specialist that connects elite investors with innovative and disruptive opportunities like NextGen Cloud. With expertise across sectors from technology and healthcare to real estate and private equity, New Capital Link provides curated deal flow and capital raising services. Investors interested in gaining exposure to the high-growth cloud computing market can inquire about NextGen Cloud’s current capital raise by contacting New Capital Link directly.

Picture of Rachel Buscall

Rachel Buscall

Co-Founder & Managing Director at New Capital Link.

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Alternative investment specialists offering structured opportunities across the UK & Overseas.

New Capital Link is a boutique London-based introducer that offers unique UK & global investment opportunities worldwide.

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