For some cloud stocks, the sky may be the limit.
Cloud stocks like Adobe and Workday are surging, and some investors say the best is yet to come
Adobe shares surged more than 9 percent Tuesday, the stock's best day since last October. The rise came after Adobe reported quarterly earnings that beat Wall Street analysts' estimates. Shares of Workday, which rallied 5.7 percent on Tuesday, were up 2 percent in Wednesday's premarket after Bernstein upgraded the stock.
Adobe is one stock in the cloud space that looks solid within a bifurcated group, said Gina Sanchez, CEO of Chantico Global. The stock, up 73 percent in the last year, could continue to soar amid broader market volatility.
"The Nasdaq has been facing real issues and real tests over the last several trading sessions, and I don't think that's going to stop," Sanchez said Tuesday on CNBC's "Trading Nation. " "Adobe probably has the best fundamentals. From a fundamental point of view, I think Adobe is probably going to be a clear winner. But I don't think this is a one, unified group."
She pointed to Salesforce as one cloud stock that's overvalued and noted that Adobe is seeing continued growth.
"So that from that perspective, the fundamentals are great. The bigger question is, where is the market going to set forward expectations for pricing and valuation? That could be maybe the one fly in this ointment. But I do actually think that from a fundamental perspective, this is a solid stock," she added.
Adobe also appears well-positioned from a technical standpoint, according to Todd Gordon, founder of TradingAnalysis.com.
"It's a really nice-looking chart. If we go back to the summer of 2017 … it's a very nice symmetrical, rhythmical, very logical up-trend support," Gordon said, examining a chart of the stock that's managed to hold technical support and likely leads to further gains.
Adobe closed 9.5 percent higher on Tuesday, at $260.67 per share.