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Cloudy Horizons: 3 Cloud Stocks Facing Stormy Weather

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   Cloudy Horizons: 3 Cloud Stocks Facing Stormy Weather

Investors have seen hefty returns in cloud computing stocks over the last 15 years. The shift from on-premise to off-premise software and data storage has truly transformed the tech industry.

However, all good things must come to an end. Cloud computing, once a groundbreaking trend, now appears saturated. Many SaaS vendors have fully integrated cloud solutions into their product offerings, raising doubts about the potential for new firms to replicate the same success enjoyed by early adopters.

In essence, while cloud computing may have been a gold rush for the pioneers, there’s no assurance of similar prosperity for newcomers. Here are three cloud computing stocks deemed risky due to their questionable long-term viability in the industry:

Hub Cyber Security (HUBC)

Image of falling stocks with investors' hands overlayed

Source: shutterstock.com/Leonid Sorokin

Hub Cyber Security (NASDAQ:HUBC) is an Israeli firm specializing in cybersecurity and quality and reliability systems, offering services like consulting, software, training, and software testing.

The company flew under the radar until October 2023, when its shares surged over 100% in a day amid the Hamas attacks in Israel. However, HUBC shares have since plummeted, losing 95% in a year. With recent management changes and a reverse stock split, the company, now a penny stock, faces an uphill battle to regain its footing.

HUBC’s tale reflects a common narrative – a fledgling cloud tech firm with meager revenue and significant losses struggling to stay afloat.

Rekor Systems (REKR)

Image of Rekor Systems' vehicle identification technology

Source: Al Serov / Shutterstock.com

Rekor Systems (NASDAQ:REKR) dabbled in various sectors like crisis management, traffic solutions, AI-driven machine learning, yet failed to solidify its position. Despite hype as an AI penny stock, Rekor Systems couldn’t sustain investor interest or stock price momentum.

The company’s latest earnings report disappointed, underscoring its struggle to show tangible progress despite numerous ventures. Rekor’s future looks uncertain unless it can achieve significant commercial success with its products.

Consensus Cloud Solutions (CCSI)

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Source: Shutterstock

Consensus Cloud Solutions (NASDAQ:CCSI) offers digital cloud fax technology for secure corporate communications, particularly in healthcare.

While fax technology remains favored in certain sectors for its security, Consensus Cloud’s modest revenue growth and flat client figures indicate a lackluster performance. The company faces challenges in a declining industry, highlighted by the potential erosion of demand due to digital advancements.

With looming risks and financial weaknesses, the future of CCSI as an independent public entity beyond 2034 remains uncertain.

On the publication date, Ian Bezek held no positions in the securities mentioned.

Ian Bezek has contributed over 1,000 articles to InvestorPlace.com and Seeking Alpha. He previously served as a Junior Analyst at Kerrisdale Capital, a NYC-based hedge fund managing $300 million. Connect with him on Twitter at @irbezek.