The cloud computing market has grown significantly over the past decade as more companies have moved their businesses online. Faster internet speeds have also made it possible to process more data online and turn on-premises software into subscription-based cloud services.

But this high-growth market hasn’t stopped growing yet. The global cloud computing market could further grow at a compound annual rate of 16.3% between 2021 and 2026, according to Markets and Markets, as enterprises leverage more cloud-based services to streamline operations, support growth of their mobile apps and websites, and use new machine learning and artificial intelligence technologies to analyze their data.

It can be difficult to separate winners from losers in this crowded market, but I believe three high-growth cloud stocks — Alphabet ( GOOG -1.80% ) ( GOOGLE -1.91% ), CrowdStrike ( CRWD 0.54% )and Datadog (DDOG -2.15% ) — could still generate life-changing returns.

1.Alphabet

Alphabet’s Google may initially seem like an underdog in the cloud market, but it’s actually one of the fastest growing players in the industry.

Google Cloud‘s revenue grew 47% year-over-year to $19.2 billion, or 7% of Alphabet’s revenue, in 2021. Its share of the global cloud infrastructure market also rose two percentage points to 9% in the fourth quarter of the year, according to Canalys, placing it firmly in third place behind Amazon ( AMZN -2.11% ) Web Services (AWS) (33%) and Microsoftit is (MSFT -1.46% ) Azure (22%) in the race for the public cloud.

Google continues to attract big customers, especially retailers who don’t want to tie themselves to Microsoft’s other enterprise software or fuel the growth of Amazon’s most profitable business. Google Cloud’s operating loss also fell from $5.6 billion in 2020 to $3.1 billion in 2021, indicating economies of scale are taking hold. Those losses could continue to narrow this year as it secures more customers and raises prices.

Alphabet still generates most of its revenue and all of its profits from its core advertising business. However, the many tentacles of this ecosystem – which include its online search engine, YouTube, Android, Chrome, Gmail, Google Drive and other services – are also cloud-based.

This sprawling ecosystem makes Alphabet one of the most diverse players in the secular growth of the cloud market. Analysts expect it to continue delivering double-digit revenue growth with flat earnings for the foreseeable future, but the stock still looks cheap at just 25x earnings going forward.

2. CrowdStrike

In the past, most enterprise-grade cybersecurity services required the installation of on-premises appliances. This approach was expensive, required regular on-site maintenance, and was difficult to scale as the business grew. CrowdStrike, which was founded in 2011, solves these problems with a cloud-native platform that requires no appliances.

Its platform, Falcon, protects network endpoints, such as mobile devices, laptops, desktops and Internet of Things (IoT) devices, from malicious attacks. It usually attracts customers with a starter trial of four cloud-based modules to sell additional modules. Last quarter, 57% of its customers were using five or more modules, up from 47% a year earlier.

Between fiscal year 2020 and fiscal year 2022, which ended in January, the total number of CrowdStrike subscriber customers more than tripled from 5,431 to 16,325. Its revenue jumped 66% to $1.45 billion in 2022, and it expects another 47% to 49% growth in fiscal 2023. The shares from CrowdStrike aren’t cheap at 23x this year’s sales, but they are trading at a more reasonable price. ratio against many other “hypergrowth” stocks.

CrowdStrike is not yet profitable according to generally accepted accounting principles (GAAP), but it has been in the black on a non-GAAP basis for the past two years. It expects its non-GAAP net income to rise 56% to 70% this year.

Its stock may remain volatile in this choppy market, but it’s still one of the top players in the cloud-based transformation of the cybersecurity industry.

3. Data Dog

As organizations grow, it becomes increasingly difficult for IT professionals to diagnose hardware and software platforms across a wide array of fragmented platforms. Datadog solves this problem by monitoring all of these services simultaneously and aggregating real-time data into unified dashboards.

Datadog’s cloud-based service can help businesses save a lot of time and money while proactively preventing hardware and software disasters. That’s why the company is growing like a weed: its revenue jumped 70% to $1.03 billion in 2021, while its non-GAAP net income jumped 133% to reach $167 million. It also became profitable on a GAAP basis in the fourth quarter of the year.

Between the fourth quarters of 2019 and 2021, the total number of Datadog customers who generated more than $100,000 in annual recurring revenue (ARR) more than doubled, from 858 to 2,010. Its net dollar retention rate has also remained above 130% for 18 consecutive quarters.

Datadog expects its revenue to grow 47% to 49% in fiscal 2022. Analysts expect its adjusted earnings per share to rise 6%.

Datadog shares may look expensive at 28 times this year’s sales, but its robust growth rates, improving profitability and first mover advantage in its high-growth niche market all justify the higher valuation.