Monday, January 4, 2010

Hosting & Cloud Computing market index: Update

Last month I proposed that another way to measure adoption of cloud computing (or, at least, expectations of adoption) was to look at the stock market performance of a bundle of publicly-traded service provider companies.

Since then, I've expanded the list, and carried the range back 24 months.

The total list (the "broad hosting index") consists of: Digital Realty Trust, DuPont Fabros, Equinix, Internap, Iomart, Macquarie Telecom, Navisite, Rackspace, Savvis, Switch & Data, Telecity, and Terremark.  I also baselined my "virtual" fund against the NASDAQ index. I created another virtual fund (a subset list of the above) consisting of Equinix, Navisite, Rackspace, Savvis and Terremark - representing service providers with substantial businesses in the Cloud hosting space as well.

Here are some interesting observations of the value change of US$100 invested equally across each index:

Since Jan 2008:
  • Nasdaq:  + ~14%
  • Broad Hosting index: + ~90%
  • Cloud Subset: + ~50%
But, I also looked at the change since the market bottomed-out in March of 2009. Since then, the picture is a tad different:
  • Nasdaq: + ~ 55%
  • Broad Hosting index:  + ~135%
  • Cloud Subset:  +~ 115%
These numbers tell me that the performance (or at least, expectations of performance) in the hosting space far exceeds the broader NASDAQ technology sector.  Interestingly, the "cloud index" under-performs the broader index. No explanation here other than the fact that we're dealing here with a statistically low number of companies, and a few "high performers" in the broader index seem to be lifting it above the cloud index.

I'll plan on updating this periodically. Comments, additions, etc. welcome!

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