With demand outstripping supply, price is no object. This is great news for new entrants to the cloud market like CenturyLink (CTL), AT&T (T), Verizon (VZ), Dell (DELL) and HP (HPQ). The carriers and enterprise-class PC vendors have time to build out their cloud investments and scale them to current customers. In short, they can defend themselves.
This is also good news for IBM (IBM), which turns out to be in a cloud computing sweet spot. It has experience building private and hybrid clouds, has skills on board at a time of high demand for the company, and with price not yet an issue it should do extremely well both this year and next.
But understand what cloud is, at heart. It's a way to cut costs. Distributed computing techniques cuts the cost of hardware, allowing el-cheapo servers to do the work of expensive ones. Virtualization reduces software costs, as a single instance of a database can cover an entire enterprise, and you're not buying individual server licenses any more.
Google long-ago moved from saving on cloud basics to squeezing out costs for heating and lighting, which are big in the data center. Google has also extended its cloud into major cities with a small version of its services it can put into a shipping container and ship to a phone company point of presence, reducing the need for data transport.
Amazon has gone to school on every advance Google has made. Both have used cloud computing techniques to consolidate their data center resources, so while rivals are buying real estate they're not.
In the toughest cloud squeeze now may be Rackspace (RAX). It is the lead sponsor of OpenStack, which is being adopted by large players such as DELL and AT&T. But it lacks the capital scale needed to build a global footprint quickly. If the company's stock price is squeezed, look for it to quickly become a takeover target.
Notice that I haven't yet mentioned Microsoft (MSFT). It put heavy investment into its Azure cloud over a year ago, but the conservative customer base has yet to follow. This has led it to support open cloud systems like Linux, which may actually help it in the long run but will not generate much cash flow immediately. Investors there need to see some big gains at Xbox, Kinect, Windows Phone and look for Windows 8 to be a hit, in order to cover up a slow ramp-up in sales and profitability.
Personally I own shares in Google, Amazon, IBM and Dell. Google is finally moving toward monetizing assets, Amazon has enormous cash flow from retailing plus the most popular cloud API. I mentioned IBM being in a sweet spot, with experience, capital, customers and control. I think Dell's manufacturing and sourcing can help it maintain low build-out costs on a global scale, but my call on it is based entirely on price.
Feel free to disagree.