The artificial intelligence (AI) saga, supported by the massive growth of cloud computing and data centers, is yet to fully unfold. This space remains rock solid supported by an extremely bullish demand scenario. The demand for data center capacity has surged to manage and store the vast amount of cloud computing-based data.
In order to reap the benefits of this enormous opportunity, we recommend investors buy five cloud computing behemoths at this stage and hold them for the long term. These stocks are set to immensely benefit from an AI-induced cloud boom in the second half of 2026.
These are: Amazon.com Inc. AMZN, Alphabet Inc. GOOGL, Cisco Systems Inc. CSCO, Cloudflare Inc. NET and Palantir Technologies Inc. PLTR. Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Amazon.com Inc.
Amazon.com’s international expansion and diversification across e-commerce, AWS cloud services, advertising and streaming create multiple revenue streams while reducing concentration risk.
AI integration throughout AMZN’s operations represents a transformative catalyst for efficiency gains and new revenue opportunities across the entire business ecosystem. AWS provides cutting-edge AI and machine learning services to enterprise customers, positioning Amazon as a leader in the rapidly expanding generative AI market.
AMZN’s chips business exceeded a $20 billion annual revenue run rate, with Graviton, Trainium and Nitro growing triple-digit percentages year over year, and AWS secured commitments from OpenAI and Anthropic for Trainium capacity. AMZN deploys AI extensively in its e-commerce platform for personalized recommendations, inventory management, and dynamic pricing optimization that enhances profitability.
Logistics operations benefit from AI-powered routing algorithms and warehouse automation that reduce delivery times and operational costs significantly. AMZN's substantial investments in AI infrastructure and talent development create formidable competitive barriers while unlocking innovative capabilities that drive customer engagement, operational excellence, and margin improvement across all business segments.
Amazon.com has an expected revenue and earnings growth rate of 15.3% and 23.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.1% over the last 30 days.
Alphabet Inc.
Alphabet is significantly emphasizing its AI capabilities to boost its search engine advertising business and cloud computing business. Management attributed the acceleration to strong performance across Google Cloud Platform, enterprise AI solutions, enterprise AI infrastructure and core services such as cybersecurity and data analytics.
Alphabet continues to benefit from investments in infrastructure, security, data management and analytics and a growing global footprint of cloud regions and availability zones. The company also plans to begin delivering tensor processing units (TPUs) to select customers in their own data centers, with most related revenues expected in 2027, which expands the addressable market over time.
Google Cloud’s differentiated full-stack AI approach strengthens Alphabet’s competitive positioning. The company integrates its own infrastructure (TPUs and GPUs), proprietary AI models (Gemini), and data platforms (like BigQuery) into a unified offering.
This vertical integration enhances performance, lowers costs and creates higher switching barriers for enterprise customers. As a result, Alphabet is winning larger deals, accelerating customer acquisition, and deepening relationships, all of which reinforce long-term growth potential.
Alphabet has an expected revenue and earnings growth rate of 723.5% and 32.5%, respectively, for the current year. The Zacks Consensus Estimate for current year’s earnings has improved 0.1% over the last 30 days.
Cisco Systems Inc.
Cisco Systems has been benefiting from strong product orders from hyperscalers, enterprises, service providers, the public sector and cloud customers. In the last reported quarter, CSCO generated record-high revenues primarily attributable to its networking portfolio, powered by Silicon One, AI-native security solutions and operating systems.
CSCO expects total AI infrastructure orders to reach $9 billion in fiscal 2026, an increase of 4.5X from fiscal 2025. Overall product orders grew by a sizable 35% year over year in the third quarter. Of this, data center switching orders grew 40% from the year-ago period, supported by massive AI-powered data center buildout.
Cisco has decided to retrench 4,000 manpower as part of a sweeping restructuring effort. Management said that this restructuring has been guided to give more emphasis to areas such as AI networking infrastructure, network security, silicon and optics.
Cisco Systems has an expected revenue and earnings growth rate of 7.6% and 11.6%, respectively, for the next year (ending July 2027). The Zacks Consensus Estimate for next year’s earnings has improved 2.6% over the last 60 days.
Cloudflare Inc.
Cloudflare is benefiting from the demand for integrated security, networking and developer services as enterprises modernize and AI reshapes internet traffic. NET’s AI-focused networking and cybersecurity offerings are gaining traction as more workloads shift toward edge architectures.
NET noted that it added 1 million developers in the first quarter of 2026, and highlighted customer interest in controlling and monetizing AI bot and agent traffic. This expands the opportunity for the Workers platform and related products as customers build real-time applications closer to end users. NET also noted that AI and agents are becoming a larger share of how software is built and consumed, supporting longer-term platform demand.
Cloudflare has an expected revenue and earnings growth rate of 29.7% and 29%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.8% over the last 30 days.
Palantir Technologies Inc.
Palantir Technologies’ AI strategy is comprehensive, combining its proprietary Foundry and Gotham platforms with a solid plan to promote AI adoption across both government and commercial sectors.
PLTR’s AI Platform is the backbone of these capabilities, enabling organizations to process large datasets and derive real-time insights. This is especially valuable in sectors requiring extensive data integration, such as defense, healthcare, finance and intelligence, where operational efficiency and decision-making speed are critical.
In the government sector, Palantir is aligning its AI strategy with U.S. defense priorities. Its work in high-profile initiatives, such as the Department of Defense’s Open DAGIR project, highlights its ability to modernize military operations through AI-driven solutions where data interoperability and real-time decision-making capabilities are imperative. These capabilities solidify PLTR’s position as a key player in the defense sector.
In the commercial space, Palantir’s AIP boot camps — providing hands-on experience to over 1,000 companies — have proven instrumental in customer acquisition. Boot camps showcase the platform’s capabilities and demonstrate its adaptability across logistics, manufacturing, and supply-chain management. PLTR’s core customer base comprises businesses seeking tailored AI/ML services, particularly large government and corporate clients willing to invest heavily in its systems.
Palantir has an expected revenue and earnings growth rate of 71.9% and 97.3%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.7% over the last seven days.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpAmazon.com, Inc. (AMZN) : Free Stock Analysis Report
Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Cloudflare, Inc. (NET) : Free Stock Analysis Report
Palantir Technologies Inc. (PLTR) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
