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The Cloud Trend is Intact - MGI Cloud 30 Index Reaches an All Time High

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
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on Monday, 29 July 2013 in MGI Quant

The upward trend in cloud equities is intact. On Friday, July 26 2013, The MGI Cloud30(tm) Index reached an all-time-high of 247.02. But even with the latest surge in performance, the cloud stocks have markedly under performed the broad equity index benchmarks like S&P 500. The gap between MGI Cloud30 and S&P 500 has narrowed considerably from over 17% earlier this year to just over 3.5% as of Friday. While it is difficult to assess how many investors have followed this arbitrage situation, it is clear to us that the interest level is clearly rising.

In our analysis we have attributed most of the lag in cloud stocks to issues with infrastructure and tools companies that have mixed enterprise/legacy and new cloud businesses. The older businesses seem to be decelerating much faster than the new business is picking up. This air pocket may go away as the new revenue opportunities will begin to gain critical mass in 2014.

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