3 Cloud Computing Stocks to Watch as Apple Goes All-In on AI

With the announcement of Apple’s (NASDAQ:AAPL) new approach to artificial intelligence (AI) called Apple Intelligence, three of the biggest cloud computing stocks are about to reach the next level of consumer exposure. That’s because Apple is now moving toward offering on-device, artificial intelligence through a partnership with OpenAI for its ChatGPT platform. While the AI itself will run on the device, much of the data analytics required to make it effective over the long run will be provided by Apple’s biggest cloud service suppliers.

For investors taking positions in these stocks, buying now could be exceptionally lucrative as Apple pushes to revolutionize how the average person interacts with AI. That’s because Apple will need to spend billions of dollars on cloud infrastructure to support a future where millions of people actively rely on its AI services for daily tasks related to their phones and personal devices.

Microsoft (MSFT)

Though Apple largely transitioned away from using Microsoft’s (NASDAQ:MSFT) Azure cloud computing system, it still partners with the company for several of its major features. Even more interesting now, it will likely rely heavily on Microsoft moving forward due to MSFT’s relationship with OpenAI.

Moreover, Microsoft is likely to derive a generous amount of revenue directly from Apple in the form of royalties for its usage of ChatGPT as Open AI since Microsoft’s investment in open AI allows it to collect 49% of the profits generated by the company.

Thus, for Microsoft and its investors, Apple‘s decision to jump on the AI train is a win-win situation across the board. Not only will Microsoft be able to derive revenue from Apple, but it will also be able to analyze the usage data of ChatGPT to improve the AI even further. As such, Microsoft is one of the best cloud computing stocks to buy as Apple goes all in on AI.

Alphabet (GOOG, GOOGL)

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Surprisingly, another one of Apple’s major cloud service providers, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) provided its Google Cloud Platform and Google Search engine to support Apple’s products for the better part of a decade. That may come as a surprise, considering that the two companies still actively compete in smartphone and smartwatch sales, but it seems like, in this case, supporting Apple’s cloud endeavors is incredibly lucrative for Google.

While Google may not be as directly involved in AI development for Apple’s products as Microsoft and OpenAI are, it is now Apple’s biggest cloud service provider since the company moved away from Microsoft Azure.

Moreover, much of the cloud computing technology necessary to help process all the data that Apple’s intelligence devices will generate is likely to run through Google’s computers, increasing the company’s revenue from Apple-related services.

Amazon (AMZN)

Source: Sundry Photography / Shutterstock.com

It may be difficult to believe, but at one point, Apple was Amazon’s (NASDAQ:AMZN) biggest cloud service customer. In fact, when iCloud was launched in 2011, Amazon Web Services was its first host for all of its features. Now, Apple diversified a few of those features across the aforementioned Google Cloud and Microsoft, but the fact remains that its iCloud product line relies heavily on AWS to operate.

With the introduction of Apple intelligence and the data-intensive storage requirements that iCloud will likely have to implement, Amazon will likely derive even more revenue from Apple. This all stems from Apple’s focus on designs and software rather than investing in computers and manufacturing infrastructure.

Combine this with Amazon Web Services’ other success as a cloud computing provider, and it’s clear why AMZN stock might be the best cloud computing company to buy right now.

On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor held LONG positions in AAPL and AMZN.