To The Moon

Last night, the share prices of several cloud service companies rose sharply, such as $Cloudflare, Inc.(NET)$, $SentinelOne, Inc(S)$ and $Zscaler Inc.(ZS)$, which basically rose by more than 7%, and even yellow flower$Zoom(ZM)$ rose by 7.8%.

Below are top 10 cloud services companies for reference.

$Snowflake(SNOW)$, $Cloudflare, Inc.(NET)$ ,$SentinelOne, Inc(S)$ ,$MongoDB Inc.(MDB)$ ,$Bill.Com Holdings, Inc.(BILL)$,$Atlassian Corporation PLC(TEAM)$,$MongoDB Inc.(MDB)$,$Datadog(DDOG)$,$CrowdStrike Holdings, Inc.(CRWD)$,$Zscaler Inc.(ZS)$.

In fact, semiconductor, such as $NVIDIA Corp(NVDA)$, ushered in a long lost rebound.

Since the CPI was released in the United States, the$NASDAQ(.IXIC)$ has been ready to move. The logic behind it is that although the CPI reached a new high in 40 years, the core CPI did not exceed expectations by taking off the fuel.

Therefore, the market believes that the impact of inflation is not terrible. Coupled with the landing of CPI boots, US stocks habitually rebounded.

Therefore, cloud services and semiconductors, as representatives of growth stocks, generally fell sharply in the previous trend, and inflation concerns fell. The first positive thing is growth stocks.

In terms of performance, cloud service companies such as cloudflare, sentinelone and zscaler are growing very rapidly, and the revenue growth rate is generally about 50%, except zoom.

High valuation is accompanied by high growth. Most cloud service companies are not yet profitable. Therefore, the market generally adopts market sales rate for valuation, and the current multiple is generally in the range of 30-50 times market sales rate.

For example, snowflake's revenue in fiscal 2019 was $96.67 million and reached $1.22 billion in fiscal 2022, with an exaggerated growth rate.

Of course, the valuation of snowflake is not low, and the current market sales rate is as high as 56 times.

In fact, before the cloud services company has yet to make a profit, valuation is a metaphysics. It is hard to say clearly how much valuation is foam. Just like$( Zoom)$, share prices have risen greatly under the outbreak of the office demand driven by the epidemic promotion. But who can imagine that the performance of Zoom has collapsed after the new crown has not ended.

Therefore, cloud service companies are most afraid of the slowdown in revenue growth. As for monetary policy, a sharp tightening is certainly bad, but the Federal Reserve will not bite fat. Interest rate hikes are slow. During this period, cloud service companies will still be the leader of the market as long as the growth rate does not slow down.

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