An Underappreciated Cloud Play
Amazon.com, an e-commerce leader, is also an overlooked cloud stock, Allen said.
"The stock actually is undervalued," he told CNBC. "That's probably a controversial statement to make, but Amazon is under-earning its business model by a lot."
The reason that seems bold is that on a traditional price-to-earnings basis, Amazon trades at 200 times 2013 earnings, while Google trades on just under 20 times.
But, Allen said, Amazon has been making "smart investments" in both its e-commerce and cloud business, "such that the durability of high growth is really strong and among the best of any company I look at."
Analysts are generally bullish on the stock with a median price target of $320, according to Thomson Reuters. That implies about 20 percent upside. This week, Lazard Capital Markets joined the bulls, initiating coverage on Amazon with a buy rating and a $310 price target on expectations that margins will pick up.
(Read More: Keep Betting on Amazon's Bezos: Pros)
"Amazon's cash flow margins were in the high single digits three or four years ago," Allen said. "It's been in an investment cycle, but it has proven the ability to earn those kinds of margins. Getting back to those levels would reveal the stock to be quite undervalued."
His other underappreciated cloud stock is Microsoft. The company "to an extent is an example of a play that cloud is a better setup than investors think," he said. And the giant is making progress in its cloud offering, which "points to a brighter future" for the stock, he added.