Amazon.com Inc.’s cloud computing unit, Amazon Web Services (AWS), is introducing a new version of its Graviton chips, designed to power high-end computing and help in tasks such as weather forecasting and gene sequencing.
This opens doors for AWS to rent computing power to its customers which is more cost-effective than renting time on processors built by companies such as Intel Corp., Nvidia Corp., and Advanced Micro Devices Inc. Furthermore, by introducing the new chip, Amazon can compete directly with the above-mentioned companies, who are the largest suppliers of chips.1
In addition, Amazon’s AWS recently announced an “AWS Digital Sovereignty Pledge”.
With this pledge, the cloud computing giant made a promise that customers will have full control over the location of their data within AWS, how it’s accessed, and the ability to encrypt it everywhere.
As part of the pledge, AWS has also vowed to make its cloud stronger against any network disruption and natural disasters.2
In other news, Salesforce Inc., held by the fund, reported that Bret Taylor, the co-CEO of the company, will step down on January 31, 2023. Marc Benioff, the co-founder of the cloud software company will hold the position alone.
Bret Taylor climbed through the ranks at Salesforce, which makes his departure a surprise. Not too long ago, he served as president and chief operating officer. He joined the company when Salesforce purchased his productivity software startup Quip in 2016 and he played a critical role in Salesforce acquiring Slack for $27.1 billion.3
Updates on Specific Cloud Companies
Microsoft Corp. continues to make strong strides to improve its cloud computing business. In spite of being in battle with the Federal Trade Commission over Activision Blizzard Inc., the company announced the acquisition of Lumenisity Limited.
Lumenisity offers hollow core fiber (HCF) solutions. According to the company, this acquisition will help Microsoft optimize its global cloud infrastructure. For Microsoft’s Cloud Platform and Services customers, it means strict latency and security requirements. This technology could help customers in healthcare, financial services, manufacturing, retail, and government.4
DocuSign Inc., a company that is focused on providing solutions for signing documents electronically, reported stronger-than-expected financial performance and raised its outlook for full-year sales.
Wedbush’s analyst Dan Ives said this is a step in the right direction for the company, but a lot of work is still needed to bring investor confidence back given the probability of a difficult operating environment ahead.
Analysts at Evercore ISI led by Kirk Materne stated that the new CEO initiatives seem to be working, and customer growth is decent. However, the stock price may not move until billings start to grow.5
DATA ETF: Investing in the Cloud Computing Industry
If you’re interested in investing in a cloud computing ETF, consider the Evolve Cloud Computing Index Fund (DATA ETF), Canada’s first cloud computing ETF. DATA ETF invests primarily in equity securities of companies located domestically or internationally that have business operations in the field of cloud computing. To learn more about DATA ETF, please click here: https://evolveetfs.com/data/.
DATA ETF Portfolio Strategy and Activity
For the month, SAP SE made the largest contribution to the Fund, followed by Microsoft Corp. and Oracle Corp. The largest detractors to performance for the month were Amazon.com Inc., followed by Zoominfo Technologies Inc., and Crowdstrike Holdings Inc. On the last rebalance, these securities were added to the portfolio: Concentrix Corp. and DocuSign Inc.
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- King, I. and Day, M., “Amazon’s New Chip Moves AWS Into High-Performance Computing,” BNN Bloomberg, November 28, 2022; https://www.bnnbloomberg.ca/amazon-s-new-chip-moves-aws-into-high-performance-computing-1.1852171.
- Lardinois, F., “AWS announces Digital Sovereignty Pledge,” TechCrunch, November 28, 2022; https://techcrunch.com/2022/11/28/aws-announces-digital-sovereignty-pledge/?guccounter=1.
- Novet, J., and Levy, A., “Bret Taylor steps down as co-CEO of Salesforce, leaving Marc Benioff alone at the helm,” CNBC, November 30, 2022; https://www.cnbc.com/2022/11/30/bret-taylor-steps-down-as-co-ceo-of-salesforce-marc-benioff-stays-on-as-ceo.html.
- Bary, E., “Microsoft, in FTC crosshairs, announces another acquisition,” Market Watch, December 9, 2022; https://www.marketwatch.com/story/microsoft-in-ftc-crosshairs-announces-another-acquisition-2022-12-09?siteid=yhoof2.
- Swint, B., “DocuSign Had a Good Quarter. Most Analysts Still Don’t Rate it a Buy,” Barron’s, December 9, 2022; https://www.barrons.com/articles/docusign-earnings-what-street-says-51670591773?siteid=yhoof2.