These cloud stocks are pulling away from the competition during coronavirus, Bank of America says

Published Thu, Jun 18 202012:15 PM EDTUpdated Thu, Jun 18 202012:23 PM EDT

(This story is for CNBC Pro subscribers only.) Internet and software companies turned out to be smart quick plays for investors during the coronavirus pandemic, but Bank of America said some of the companies in the sector are set to enjoy a long-term boost from the shift in demand. "We identify companies that not only benefit from COVID shifts in budgets and customer demand, but can sustain the benefit long term amid accelerated digital transformations, large addressable markets, superior technology/competitive moat, and strong customer economics," Kash Rangan, research analyst at Bank of America, said in a note. The analyst found 10 stocks with drivers to lead the competition in the cloud space in the long run. Some of these stocks have been clear winners this year so far on the back of the increased demand amid the pandemic. Zoom Video has soared a whopping 250% in 2020 as the coronavirus pandemic drove millions of new customers to the video calling service and turned it into a household name. Earlier this month, the company reported revenue growth of 169% for the first quarter and nearly doubled its revenue guidance for the full year 2020. "Zoom is a company that has succeeded in video communications, a segment of the market that is complex and difficult to figure out," the Bank of America analyst said. The bank has a 12-month price target of $260 for Zoom, which represents a 10% gain from here. RingCentral, another video conferencing company, saw its stock surge 65% this year amid a surge in demand as people are forced to work from home during the coronavirus quarantine. With a price target of $305, Bank of America believes the stock can rise nearly 12% from here. "RNG's cloud PBX system is seen by partners and customers as the gold standard, and RNG combines this with best in class contact center and video conferencing solutions," Rangan said. Tech giant Microsoft is also included in Bank of America's list. The company reported a 5% sales jump last quarter and said the coronavirus had "minimal" impact on its revenue. The stock has gained 22% this year. "The key underlying growth driver for MSFT will be its public cloud platform, Azure, benefiting from acceleration to cloud," Rangan said. The analyst sees the stock reach $230 in the next 12 months, an 18% upside from the current trading levels. Bank of America also has high conviction on software development company Atlassian , cloud computing firm VMware , cloud communications company Twilio and data processing firm Splunk .

Zoom founder Eric Yuan poses in front of the Nasdaq building as the screen shows the logo of the video-conferencing software company Zoom after the opening bell ceremony on April 18, 2019 in New York City.

Kena Betancur | Getty Images

(This story is for CNBC Pro subscribers only.)

Internet and software companies turned out to be smart quick plays for investors during the coronavirus pandemic, but Bank of America said some of the companies in the sector are set to enjoy a long-term boost from the shift in demand.

"We identify companies that not only benefit from COVID shifts in budgets and customer demand, but can sustain the benefit long term amid accelerated digital transformations, large addressable markets, superior technology/competitive moat, and strong customer economics," Kash Rangan, research analyst at Bank of America, said in a note.