Cloud Stocks Take a Hit Following JP Morgan Downgrades

Published · Dec 16, 2021

JP Morgan analysts issued a series of downgrades that have affected the price of multiple companies. The consequences were the worst for Cloudflare, Adobe, and ZScaler. A host of businesses in related industries also took a hit.

Cloudflare fell 9%, Zscaler lost nearly 8%, and Adobe dropped almost 7%. JP Morgan downgraded 13 companies in total. They only upgraded five, including Avalara and Model N, among others.

The downgrade list included Adobe, a cloud favorite for creatives, Zscaler, and Solarwinds. They and others went from neutral to overweight.

CDN providers Cloudflare and Akamai went from underweight to neutral.

Target prices were cut on LLC formation provider LegalZoom, leading online learning platform Udemy, Alkami Technology, EngageSmart, GitLab, etc.

Not All Bad

Despite Cloudflare’s downgrade, JP Morgan says it could become the largest generator of revenue in its coverage space within the next 10 to 15 years.

Cloudflare has begun positioning itself among the top solutions on the market. It is still preceded by some of the best cloud hosting providers like Amazon, Microsoft, and Google, though.

Overall, JP Morgan’s report is optimistic. Not just about the tech sector but the global economy at large.

It predicts that 2022 is likely the year the world will begin recovering from the Covid-19 pandemic. Although global lockdowns negatively impacted many, the tech industry saw a boost as work, schooling, and socializing shifted online.

A full recovery could compound tech’s gains as it exits the pandemic less scathed than other sectors.

Garan van Rensburg
Garan van Rensburg

Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.