Japan’s push for tightly controlled, “air gapped” cloud services has put hyperscale infrastructure back in the spotlight, and Oracle’s early lead in this government race is drawing fresh attention to how secure cloud capacity is built and sold. For investors, the stakes are not just about one contract, but about which stocks are most exposed to this kind of government grade demand, along with the cost and execution risks tied to it. This article walks through 3 stocks from our Cloud Computing Infrastructure Providers screener that appear positively exposed to this news and explains what that could mean for your watchlist.

Rakus (TSE:3923)

Overview: Rakus is a Japan based software company that provides cloud services such as electronic payment processing, billing and sales support tools, as well as email delivery solutions, alongside an IT human resources business that supplies engineers and infrastructure support. Its customers use these services to simplify back office workflows and manage their IT systems more efficiently.

Market Cap: ¥367.2b

Rakus stands out in the current focus on secure cloud capacity because it already sells cloud based tools and IT services that help corporate and public sector customers deal with compliance and infrastructure needs, which lines up neatly with Japan’s push for more tightly controlled systems. Earnings growth has been strong, profitability is high with a 22% net margin and ROE above 50%, and the stock is priced below one estimate of fair value despite this track record. On the flip side, the share price has been volatile and the company relies entirely on external borrowing for funding, so execution on its expansion and any government related work really matters. For investors, that mix of quality metrics and real risk makes Rakus worth a closer look.

Rakus combines high margins, strong ROE and a volatile, debt funded expansion that many investors may be overlooking. It is therefore worth reviewing the 3 key rewards and 1 important warning sign and seeing what the market might be missing

AvePoint (AVPT)

Overview: AvePoint provides cloud native software that helps organizations manage, protect, and move their data across platforms like Microsoft 365, Google, Salesforce, AWS, and more, with tools for governance, backup, and modernization of legacy systems. Its Confidence Platform is designed to keep collaboration and AI ready workflows compliant, secure, and efficient for enterprises and public sector customers.

Operations: AvePoint generates all of its US$443.7m in revenue from software and programming, with sales spread across the United States, wider North America, EMEA, and Asia Pacific regions.

Market Cap: US$2.7b

AvePoint operates in secure, high stakes cloud infrastructure and provides the data migration, backup, and governance tools that keep Microsoft based environments compliant for governments and large enterprises. Profitability is still relatively young and the P/E is high, so execution risk and dependence on Microsoft remain important watchpoints, especially as multi cloud expansion is still limited. Its AI governance focus also addresses concerns many boards have about uncontrolled data and AI agents. For investors interested in how cloud security and AI governance could affect data management, AvePoint offers more to unpack than first meets the eye.

AvePoint’s accelerating push into AI ready governance and security could be masking a deeper shift in its business mix. Before adding it to your watchlist, review the analysis report for AvePoint to understand what the P/E alone might be hiding.

Megaport (ASX:MP1)

Overview: Megaport is an Australia based company that runs a global software defined networking platform, letting customers quickly connect their private networks to major cloud providers and data centers on an on demand basis. Its services support hybrid and multi cloud setups, giving enterprises and governments more control over how they move and secure data across different cloud environments.

Operations: Megaport generates A$255.2m in revenue, with A$150.1m from The Americas, A$63.6m from Asia Pacific, and A$41.5m from Europe.

Market Cap: A$4.7b

Megaport is tightly aligned with the Oracle led push for secure cloud in Japan because it already connects enterprises to Oracle, AWS, Microsoft Azure, and Google Cloud, and supports the kind of multi cloud traffic patterns that sensitive AI and government workloads require. The company is still unprofitable and has relied on significant equity issuance. New services such as Megaport Storage and DDoS Protection point to a broader platform aimed at AI ready, security focused customers. For investors, the key question is whether this expanding product set and global reach justify a premium P/S and recent outperformance of the Australian IT sector.

Megaport’s expanding product suite and premium P/S suggest the story is bigger than simple sector exposure. Review the 1 key reward and 1 important major warning sign to see what might be driving that gap and what could upset it.

The three stocks covered here are only a starting point. The full Cloud Computing Infrastructure Providers screener surfaces 34 more companies with equally compelling narratives around cloud infrastructure, data centers, and secure workloads. Use Simply Wall St to identify, filter, and analyze the specific catalysts and risk profiles that matter to you, so you can focus on the highest conviction ideas in this space.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.