We recently published a list of 8 Cloud Computing Stocks Under $10. In this article, we are going to take a look at where Alight, Inc. (NYSE:ALIT) stands against other cloud computing stocks under $10.
As per Nasscom Community, the cloud computing market saw a staggering growth in 2024, touching $1.2 trillion. This market was aided by significant demand for scalable, efficient, and cost-effective digital solutions. Some of the critical growth drivers include the proliferation of remote work, acceleration in digital transformation initiatives, and robust adoption of IoT devices.
AI To Drive Growth in Cloud Computing
Over the past few years, cloud computing has merged with Al and redefined business operations throughout industries. As per Industry experts, cloud strategies have been shifting as organizations continue to utilize more services and Al is expected to be one of the biggest drivers. John Samuel, global CIO, and EVP at a global IT and outsourcing provider, believes that cloud providers have invested significantly in GenAl technologies and are collaborating with chip manufacturers to enhance performance and scalability.
According to Samuel, these alliances should enable cloud platforms to power a growing ecosystem of downstream SaaS providers that build solutions to allow easier adoption of Al-based solutions. Therefore, GenAl continues to be a key enabler for adopting advanced Al capabilities throughout industries, with the cloud acting as the backbone.
As per Alex Turgeon, President of Valere, Al is expected to drive ~35% of the cloud computing market's growth over the upcoming 2 years. In 2025, Al and cloud computing are expected to form an inseparable partnership. Alex Turgeon believes that investments by companies in Al-enabled cloud infrastructure should enhance scalability, performance, and accessibility. As per Deloitte, 70% of the companies that are adopting Al will adopt it via cloud-based infrastructure.
Key Cloud Computing Trends for 2025
According to Nasscom Community, future developments in the cloud computing field are expected to be aided by multi-cloud strategies. This will involve the use of more than one cloud service provider between the business and the cloud altogether. By 2025, different cloud networks can communicate, which will result in more interoperability between different cloud platforms. By next year, companies are expected to focus on green cloud initiatives. Therefore, cloud solution sustainability with respect to infrastructure is expected to become a major trend by 2025.
Well-established cloud service providers continue to focus on cutting their global emissions as they tap the green data centers making use of renewable energy such as wind and solar installations. While some leading technology firms use renewable energy sources in their data centers, others have committed to achieving carbon negativity by the year 2030. Nasscom Community went on to add that firms will look for cloud service providers that have solid sustainable solutions, such as carbon neutrality in computing strategies on corporate responsibility programs.
A person viewing their financial progress on a computer, highlighting the financial health offerings of the company.
Our Methodology
To list the 8 Cloud Computing Stocks Under $10, we used a screener and online rankings to extract the list of companies belonging to the cloud computing industry. After getting an initial list of 20-25 stocks, we filtered out the ones trading below $10. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Alight, Inc. (NYSE:ALIT) is a leading cloud-based provider of integrated digital human capital and business solutions. Alight, Inc. (NYSE:ALIT) remains optimistic about its operational momentum heading into 2025. While the company expects full-year adjusted EBITDA of between $585 million - $610 million, it expects annual recurring revenue (ARR) bookings to grow by double digits in the latter half of the year. Alight, Inc. (NYSE:ALIT) expects a recovery in demand as it expands its client base. The company announced some critical wins in Q3 2024, with major clients like Hewlett Packard Enterprise, Nokia, and Siemens, indicating healthy market momentum.
Alight, Inc. (NYSE:ALIT) completed its cloud migration, which should drive ongoing savings and improve user experience. The company’s new cloud-based foundation creates a connected ecosystem that drives innovation, enhances availability and security, and improves performance, all within a streamlined infrastructure. The transition is expected to result in $75 million of annualized savings.
Alight, Inc. (NYSE:ALIT) is now well-positioned to deliver enhanced performance and increased capacity throughout the Alight Worklife platform. The company expects strong demand for its integrated platform, which should drive user engagement and experience. Alight, Inc. (NYSE:ALIT)’s go-to-market strategy has been enhanced, with a strong focus on enterprise sellers and domain experts.
Polen Capital, an investment management company, released its Q3 2024 investor letter. Hereis what the fund said:
“We exited four positions during the quarter, including SiTime, AppFolio, RH, Doximity, and Alight, Inc. (NYSE:ALIT). Our position in Alight, a benefits outsourcing and business process-as-a-service company, was an unsuccessful investment. We decided to move on due to activist pressure that led to a breakup of the business. We were dissatisfied with both the plan and the new standalone business. This culminated with the CEO leaving and uncertainty over the company’s long-term strategic direction. As a result, we felt it was time to move on with better investment ideas in our pipeline.”
Overall, ALIT ranks 1st on our list of cloud computing stocks under $10. While we acknowledge the potential of ALIT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than ALIT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
