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Cloud computing stocks hitting an all-time high amid coronavirus: BVP

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Jeff Lawson, CEO, Twilio

Scott Mlyn | CNBC

An index of cloud stocks developed by venture-capital firm Bessemer Venture Partners reached new highs this week as  U.S. indexes still recover from the selloff that began in February. 

The BVP Nasdaq Emerging Cloud Index, established in 2013, is up about 31% for the year, while the S&P 500 is down about 9%. 

The performance has to do with the strength of its constituents: Mostly mid-cap companies that have gone public in the last few years, and that provide specialized cloud services for businesses in areas like human resources, payments or communications.  (Large-cap stocks with major cloud-computing operations like Amazon and Microsoft are not included.)

When companies, government agencies and schools cannot as easily access their data center equipment for installing or managing software — for example, because of the coronavirus pandemic — cloud services can provide convenient and potentially less expensive alternatives. Investors have been rewarding these companies for their recent gains, but the trend may not continue as people return to school and work.

One of the top performers of the index in the past month is website builder Wix, which has risen 65%. The company has seen greater demand as of late with people wanting to represent themselves online, which led executives to release a “significantly higher outlook for Q2 than we originally expected,” according to its first-quarter earnings statement from last week.



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