We recently published a list of 10 Best Cloud Computing Stocks to Buy Under $10. In this article, we are going to take a look at where Blend Labs Inc. (NYSE:BLND) stands against other best cloud computing stocks to buy under $10.
Cloud computing refers to delivering computing services—such as servers, storage, databases, networking, software, and analytics—over the Internet (the “cloud”). It means businesses and individuals can access these resources on demand instead of owning and maintaining physical servers and infrastructure, paying only for what they use. This article looks at a broader definition of cloud computing, not just cloud infrastructure companies. These include companies delivering products via the cloud, including the “as-a-service” model, such as software-as-a-service (SaaS), Infrastructure-as-a-service (IaaS), Platform-as-a-service (PaaS), cloud-native applications, or platforms and services running on the cloud.
The cloud computing industry has grown impressively over the years because of its cost-effectiveness, its ability to provide unlimited scalability, and the increased speed of digital transformation. Simply put, digital transformation and adopting new technologies have become crucial to survival and competitiveness in the current market environment, which leads to higher demand for cloud computing services. Even smaller firms can now afford to adopt new technologies with the help of cloud services. This allows them to become agile and well-equipped to compete and adapt to changing market dynamics.
However, this technology still has a long growth trajectory ahead of it, as highlighted by Gartner in its latest report on this topic. In this report, Gartner had projected that 90% of organisations will adopt hybrid cloud by 2027. The research firm also forecasted that worldwide end-user spending on public cloud services will reach around $723 billion in 2025 from $596 billion in 2024. Of the total, IaaS and PaaS segments are expected to grow the fastest, with an increase of 25% and 21.6%, respectively. While these two segments are growing faster, SaaS is expected to remain the largest segment, contributing around 41% of the total spending.
On CNBC’s Closing Bell Overtime program some months ago, Goldman Sachs’s managing director Eric Sheridan discussed AI and cloud computing, among other topics. He noted that the cloud computing sector remains robust and is further strengthened by the increasing deployment of AI technologies. Additionally, businesses are increasingly looking to integrate AI into their workflow to improve productivity and efficiency. In addition, he said that the industry is still looking for that “killer application” for AI, which essentially means a use case that could have a sizeable transformative effect on industries or lives using AI. Adding to his views, Eric also highlighted that while AI’s benefits are visible in the short term, long-term impacts and benefits are yet to become visible. Overall, this discussion indicated robust growth in cloud computing in the coming years.
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To identify the best cloud computing stocks to buy under $10, we first compiled a list of cloud computing stocks using screeners, ETFs and financial media reports. We then screened for stocks trading below $10, with a market capitalisation of at least $300 million, and a potential upside greater than 10%. We identified the top 10 stocks with the highest hedge fund ownership from this refined list by leveraging data from Insider Monkey’s Q4 2024 hedge fund database. Finally, we ranked these stocks in ascending order based on the number of hedge funds holding positions in them.
Note: All pricing data is as of market close on March 28.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is Blend Labs Inc. (BLND) the Best Cloud Computing Stock to Buy Under $10?
A close-up of a person’s hand signing a mortgage document.
Current Share Price: $3.56
Number of Hedge Fund Holders: 33
Blend Labs Inc. (NYSE:BLND) provides a cloud-based platform for banks, credit unions, and lenders which makes lending easier for them. Its software helps simplify the process for mortgages, home equity, auto loans, and personal loans, and enables financial institutions to provide a smooth and digital experience for borrowers.
In Q4 2024, Blend Labs’ total revenue increased 15% year-over-year to $41.4 million, primarily driven by the Consumer Banking Suite business, where revenue rose 48% YoY. However, its Mortgage Suite business saw a slower revenue growth of 6%. That said, the company has seen its profitability improve sharply, with adjusted net profit for the quarter coming in at $5.2 million, versus an adjusted loss of $13.1 million in the prior year period.
For the longer term, the company expects its Consumer Banking Suite Revenue to grow at a CAGR of 35%-40% from 2023 to 2026, which is impressive. The company also reported some important deal wins in the quarter, including multi-year mortgage and home equity deals with a U.S. bank, which ranks in the top 10 banks by asset size. They also signed an agreement with PHH Mortgage, one of the nation’s largest home mortgage servicers. The momentum in customer base expansion is well driven by the company’s leverage of data integration and automation to drive efficiency, compliance, and improved customer satisfaction.
Overall, BLND ranks 2nd on our list of best cloud computing stocks to buy under $10. While we acknowledge the potential of BLND to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BLND but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
