Abstract:
Cloud computing allows the delivery of computing services in an on-demand fashion over Internet, taking the form of software or storage. The growing use of Cloud computing in our daily lives bears striking resemblance to the spread of Internet before the Internet bubble, which leads to an itching question: is there (going to be) a Cloud bubble? Using the similarities between Internet stocks during the Internet bubble and current Cloud stocks, the established causes behind the Internet bubble are applied to the firms in the ISE Cloud Computing Index. In addition to two conventional measures of market sentiment: P/E and M/B ratios, I also examine first-day returns and Google SVI in search of retail investor hype, and price targets for analyst hype. Following the literature, short-sales constraints are also analysed for the sample of Cloud firms to shed light on the possibility of a new bubble, a Cloud bubble.