The Zacks Analyst Blog Highlights SKYY, WCLD, CLOU and FCLD

Here are highlights from Monday’s Analyst Blog:

A Guide to Cloud Computing ETFs

Cloud computing is a process in which data or software is stored outside of a computer, but can be easily accessed anywhere, at any time via the Internet. This idea is effective as it helps firms lower IT costs by eliminating the need for servers and related maintenance costs.

Also, it provides greater accessibility. Since everything is on the Internet, users can access any data or document at any moment. Needless to say, such advantages will make it a thing of tomorrow.

Global investment in cloud services has increased by leaps and bounds in recent years. Cloud stocks, particularly those tied to artificial intelligence (AI) infrastructure like AWS, Azure and Google Cloud, have risen massively in price in the recent past.

Growth in Cloud Infrastructure

The widespread adoption of remote connectivity has continued to fuel the need for scalable and reliable cloud solutions. Moreover, advancements in cloud technologies, including AI, machine learning (ML), and cybersecurity enhancements, have expanded the use cases for cloud services.

In Q1 2026, global cloud infrastructure service spending grew 35% year over year, bringing total spending to $129 billion. Going forward, cloud infrastructure service revenues are on track to top $500 billion for the first time in 2026, per data provided by Statista. 

Despite its massive size, the cloud market continues to grow, with YoY growth accelerating for 10 straight quarters. Fueled by AI demand, growth hit its highest level since 2021, per Statista.

Worldwide AI-optimized infrastructure as a service (IaaS) spending is projected to grow 96% in 2026, reaching $42.3 billion, according to Gartner. The spending is expected to grow by 56.5% to $66.1 billion in 2027.

According to the International Data Corporation (IDC), cloud infrastructure spending continues to surge, driven heavily by enterprise AI adoption and data center expansion. Global AI infrastructure spending alone is forecast to reach $497 billion, while total public cloud spending is on track to surpass $1 trillion, as quoted on W. Media.

IDC predicts spending on cloud infrastructure will have a CAGR of 14.3% over the 2023-2028 forecast period, reaching $213.7 billion in 2028 and accounting for 75% of total compute and storage infrastructure spend.

Inside Market Share

Global enterprise spending on cloud infrastructure services reached $143 billion in Q2 2026, up $43 billion year over year, per Synergy, as quoted on CRN. AWS remains the cloud infrastructure leader, with a 28% global market share in Q1 2026, ahead of Microsoft Azure at 20% and Google Cloud at 15%. Together, the “Big Three” control more than 60% of the market.

Neoclouds Expand the AI Infrastructure Market

Neocloud refers to a specialized segment of cloud computing that provides high-performance, AI-focused infrastructure, including powerful GPUs, to businesses through the cloud. It offers flexible and scalable computing for AI training, inference and other demanding workloads without requiring companies to build and maintain costly infrastructure.

Neocloud providers normally lock in multi-year compute contracts, generating a steadier, more predictable revenue stream than the on-demand model of traditional cloud.Companies such as CoreWeave and Nebius are expanding capacity and stand to benefit from this model.

Neocloud revenues are currently growing by over 200% year over year. The broader neocloud market is projected to expand at an average annual growth rate of roughly 58% through 2031, rising toward a market size of $400 billion, according to Synergy Research.

AI Keeps Cloud Stocks Resilient

Major cloud providers often hold up better during market pullbacks, geopolitical tensions and economic slowdowns. AI is increasingly seen as essential infrastructure of late, supporting continued demand for data centers, computing power and cloud services. These are now viewed as fundamental assets required for future economic competitiveness.

ETFs in Focus

Against this backdrop, below we highlight a few cloud computing ETFs that could stand to gain in the coming days. These ETFs are currently hovering around a 52-week high level.

First Trust Cloud Computing ETF

The underlying ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry. The $3.44-billion-asset fund charges 60 bps in fees.

Everpure (4.55%), Arista Networks (4.29%) and Nutanix (4.03%) are the three top holdings of the fund. Software (46.44%), IT Services (24.71%) and Technology Hardware, Storage & Peripherals (10.53%) are the three top industries of the fund.

WisdomTree Cloud Computing ETF

The underlying BVP Nasdaq Emerging Cloud Index is an equally weighted index, designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers. The fund has an asset base of $331.2 million and charges 45 bps in fees. Palo Alto (2.7%), JFrog (2.56%) and CrowdStrike (2.36%) are the top three holdings of the fund.

Global X Cloud Computing ETF

The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology.

The fund has an asset base of $350.6 million and charges 68 bps in fees. Snowflake (6.99%), Datadog Class-A (5.40%) and Paycom Software (4.99%) hold the top three spots in the fund.

Fidelity Cloud Computing ETF

The underlying Fidelity Cloud Computing Index reflects the performance of a global universe of companies across the market capitalization spectrum that provide products or services enabling the increased adoption of cloud computing, characterized by the delivery of computing services over the internet.

The fund has an asset base of $132.8 million and charges 39 bps in fees. Western Digital (4.76%, Sandisk (4.70%) and Applovin (4.55%) are the top three companies of the fund.

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