Hardware Winners And Losers From The Public Cloud Growth Boom


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


  • Deutsche Bank sees the public cloud model as one of the biggest disruptors to the IT market since the invention of the PC.
  • The firm views HDD companies and volume server vendors as potential hardware winners from the cloud transition.
  • Stand-alone storage companies could end up the biggest losers.
  • In a new report, Deutsche Bank analyst Sherri Scribner discussed the disruptive potential of the public cloud model. As market leaders Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) pave the path forward for the transition to cloud-based models, the market shift will create a number of winners and losers in the tech space.

    HDD Poised To Benefit

    While a large number of investors seem to believe that cloud data centers rely solely on solid-state drives (SSDs) and NAND flash memory, Scribner pointed out that public cloud providers are increasing hard disk drive (HDD) storage capacity by 40-50 percent annually.

    “The challenge for the HDD industry has been that nearline or capacity-optimized HDDs (sold to the hyper-scale cloud vendors) only represented 15 percent of revenues in 2014, or 7 percent of units,” she explained.

    Deutsche Bank projects that cloud demand will make up 40 percent of HDD revenue by 2020.

    Surprise Winners

    In addition to HDD suppliers, Scribner sees volume server vendors as another group that is well-positioned to benefit from the cloud transition. Hewlett-Packard Company (NYSE: HPQ) has even developed a number of servers specifically with the cloud in mind, including Cloudline and Moonshot.

    “We estimate HP has roughly 30 percent share of public cloud server sales today, and this segment of the market continues to see strong growth,” Scribner added.

    Top Plays

    Deutsche Bank’s top hardware plays on the cloud transition are Buy-rated Western Digital Corp (NASDAQ: WDC) and Seagate Technology PLC (NASDAQ: STX).

    The firm names stand-alone storage companies EMC Corporation (NYSE: EMC) and NetApp Inc. (NASDAQ: NTAP) as the biggest potential losers from the shift to cloud storage.

    Disclosure: The author holds no position in the stocks mentioned.

    Image Credit: Public Domain

    27% profits every 20 days?

    This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


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    Posted In: Analyst ColorLong IdeasTop StoriesAnalyst RatingsTechTrading IdeascloudCloudlineDeutsche BankMoonshotSherri Scribner