Long-term investors may be better off looking at cloud computing giants rather than the highly anticipated SpaceX IPO, according to a recent analysis. Amazon, Microsoft, and Alphabet all offer established, profitable cloud businesses with clear growth trajectories driven by AI demand, while SpaceX trades at a valuation multiple that is orders of magnitude higher than its peers.
Cloud Computing Boom Fueled by AI
The trio of Amazon Web Services (AWS), Microsoft Azure, and Google Cloud dominate the cloud computing market. These businesses operate on a straightforward model: building data centers, installing computing equipment, and renting out capacity. Cloud computing allows companies to scale computing needs flexibly and avoid the heavy costs of owning depreciating hardware. It has also become the primary way AI startups access the computing power they require.
All three companies are investing heavily in data centers. At the start of 2025, the four big AI hyperscalers—including this trio and Meta Platforms—estimated they would spend around $650 billion on data center capital expenditures by 2026. Nvidia, a key supplier, predicted that figure would exceed $1 trillion next year. Amazon CEO Andy Jassy noted in his annual shareholder letter that faster cloud growth requires more spending to sustain it, and with record demand, revenue for these companies is expected to surge in the coming years.
Valuation Comparison Favors Cloud Stocks
For companies with elevated capital expenditure cycles, valuing them using operating cash flow is a smart approach. By that metric, Amazon and Microsoft look historically cheap, while Alphabet trades at a reasonable level. In contrast, SpaceX's valuation appears stretched. In 2025, SpaceX generated $6.6 billion in adjusted EBITDA. Dividing its $2.5 trillion market cap by that figure yields a price-to-adjusted EBITDA ratio of 379.
That is far higher than the multiples at which the cloud giants trade. While SpaceX must grow into its valuation before seeing further upside, Amazon, Microsoft, and Alphabet can be purchased at reasonable prices with defined growth paths. This makes the three cloud titans more compelling long-term investments than the SpaceX IPO, with the potential to outperform over the next decade.