Cloud Sector Returns to Reasonable Valuation- SNOW, NET, CRWD..

Cloud services sector began its rally after half-year's decline. In this process, many companies valuation returns to the average level. There are some data and stocks to watch.

Software multiples are almost back to their pre-covid average (7.4x vs 7.8x).

Median software multiple: 7.3x

High Growth software median: 10.7x

Mid Growth software median: 7.1x

Low Growth software median: 2.5x

Here are TOP 10 companies by valuation:

Chart from @jaminball /Twitter

Stellar Results of Cloud Companies in Earnings Season

Big tech posted good results on their cloud services:

• $Amazon.com(AMZN)$ cloud business -AWS grew 33% to $19.7 billion, above market expectations of $19.56 billion.
• $Microsoft(MSFT)$ Cloud segment- Azure, GitHub and others -grew 40% in revenueyoy.
• $Alphabet(GOOG)$ Cloud revenue continued the growth trend, with $6.276 billion in revenue remaining the world's third largest cloud provider, up 35.6%from $4.628 billion a year earlier.

Mid/small cap cloud companies:

• $Cloudflare, Inc.(NET)$ reported second-quarter earnings after the market close on Thursday. Cloudflare stock soared 47.36% last week.
• $Atlassian Corporation PLC(TEAM)$ fourth-quarter revenue rose 36% to $760 million, toppingestimatesfor $723 million. Atlassian's quarterly subscription revenue increased 55% year-over-year.
• $Datadog(DDOG)$ reported another very strong quarter with revenue growing 74% yoy and coming in well above expectations.

As growth companies began to deliver good earnings, cloud services received more attention in the stock market.

The main reason is that their main customer- businesses- didn’t cut cloud services under the economic headwinds.

According to Cloudflare,

Cloudflare added 212 new customers that will spend more than $100,000 annually, up 48% year-over-year, bringing its total to 1,749.

Therefore, market and investors are bullish on cloud sectors. Some companies like $Snowflake(SNOW)$ bounced more than the broader market.

More Cloud Earnings This Week

1. As net posted stellar earnings, the market is waiting for $Snowflake(SNOW)$ positive guidance.

$Snowflake(SNOW)$ has fallen 60% from late 2021. The Wall Street consensus rating is bullish, but there's a great deal of dispersion in various outlooks.

Currently, anslysts’ consensus of revenue is 467.05 mln.

Data from Yahoo Finance

2. Wall Street will be looking for positivity from $CrowdStrike Holdings, Inc.(CRWD)$ as it will release earnings on August 30.

It is projected to report earnings of $0.29 per share, which would represent year-over-year growth of 163.64%.

The recent consensus estimate is $515.5 million, up around 50% yoy.

Data from Yahoo Finance

Market may have retracement this week. Maybe another fall can present a good entry price for cloud sector.

Will you buy cloud services companies?

Which one are you bullish?

Share your opinions in the comment section!