The term "cloud" in "cloud computing" is about to get a little more literal (and make cloud computing stocks even more profitable).
Traditionally, "the cloud" refers to the fact that users can access data and applications anywhere in the world via the Web. The information actually resides not in the sky, of course, but in remote data centers.
Now, that image is going from metaphor to literal real-life. Privately held SpaceX is planning to provide civilian and military cloud services by beaming them from low-orbiting satellites.
The project is expected give Internet access to nearly every populated region of the globe in 2021.
To accomplish the bold mission, SpaceX has teamed up with one of the world's top cloud computing firms.
This new mission taps into the firm's core expertise - and is about to double the company's earnings, making this one of the most exciting tech investments for 2021...
To the Stars
As part of the Starlink program, which the project is aptly named, SpaceX has launched 835 satellites, with a goal of having 1,440 circling the globe by 2022.
But these aren't your regular communication satellites. Those tend to circle the Earth at about 22,000 miles above sea level.
At that huge distance, the satellite stays in the same spot in the sky, so satellite dishes don't have to constantly be recalibrated.
There's also no air to slow the satellites down, as Earth's atmosphere only extends a few hundred miles above sea level.
The downside is the time it takes to beam signals up to the satellites and back down again. Twenty-two thousand miles is so far, it takes light 0.2 seconds to cover the distance. To relay a signal from one place on Earth to another via one of these satellites, you have to double that.
Now, 0.2 seconds may not seem like much, but if you've ever wondered why satellite Internet is so slow, or why news reporters in far off places take so long to answer questions, that 0.2 seconds is why.
Even with lots of bandwidth, that 0.2-second delay in the signal getting to its destination makes for awkward pauses in conversation, websites that freeze, and sometimes even apps that just won't work.
SpaceX's Starlink system is different. Instead of orbiting at 22,000 miles, SpaceX is launching its satellites at just 340 miles.
That's almost low enough to touch actual clouds. At this altitude, there's hardly any lag in beaming signals to and from the satellites, which makes these Starlink satellites perfect for providing Internet access and cloud service wherever you are.
This is all part of SpaceX revolutionizing space travel in general. With its state-of-the-art launch rockets that are largely reusable, the company has dramatically cut the cost of going into space.
Today, SpaceX is sending cargo to space at under 2% of NASA's price.
As you can imagine, this technology has already gotten the Pentagon's attention, which signed a $149 million contract with SpaceX for special Starlink satellites to detect enemy missile launches.
But the main use of SpaceX's Starlink satellites will be Internet and cloud access.
And that's where SpaceX's top cloud computing partner comes in...
From Mission Control to Major Profits
And it's none other than Microsoft Corp. (NASDAQ: MSFT), the company behind the Azure cloud platform.
As part of the partnership, Microsoft and SpaceX will co-sell Starlink Internet service and the Azure cloud platform to enterprise customers.
It also makes Starlink an integral part of Microsoft's recently announced Azure Orbital service, which has Microsoft help customers to directly connect their satellites to the Azure cloud.
And don't forget that last October, Microsoft won the Pentagon's massive Joint Enterprise Defense Infrastructure (JEDI) contract. That's a 10-year, $10 billion deal to provide infrastructure and platform services for the Pentagon's business and mission operations.
The goal of JEDI is to unite the entire military on one platform. To put every soldier, ship, and airplane on a single data framework, and a single cloud. That's huge.
Starlink's low latency, high speed, and eventually global coverage are the perfect fit for that, making the partnership with SpaceX a great add-on for Microsoft.
This shows that, as I've been saying for years, Microsoft is a great cloud provider and a solid addition to your portfolio. Even better, this Starlink partnership has made Microsoft a great backend play on SpaceX.
Indeed, it's handing us a rare opportunity to profit from one of the most revolutionary private companies in the world.
Additionally, Microsoft reported earnings on Oct. 27 with its Azure cloud revenue up a whopping 47%. It also saw per-share profits climb by 44%.
That raised its three-year earnings average to 20%. At that rate, earnings are on pace to double in just over 3.5 years.
But that may be conservative because the firm keeps finding new growth initiatives just like the satellite cloud partnership with SpaceX that we've talked about here today.
So, we can count on Microsoft to keep its edges sharp and its profits high for many years to come.
And before you go, if you'd like to learn more about how you can get started with Microsoft and other industry leaders with strong long-term profit potential for less than $5, then you'll want to watch my colleague Shah Gilani's latest presentation...
You see, our Chief Investment Strategist flies through stocks - more than 50 - telling you which to consider buying NOW and which to drop like a ton of bricks.
Make no mistake, these picks will come fast and furious, so you'll want to take notes. Click here now...
Follow Money Morning on Facebook and Twitter.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.