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Google Inc. recently announced the expansion of its data center in Belgium to meet the fast-growing demand for Internet usage and data storage capacity.

The expansion will involve an additional investment of €300 million (around $390 million). The data center is located in St. Ghislain and Mons in Belgium and is considered to be highly energy efficient.

Earlier in 2010, Google had paid €250 million for its purchase. The Belgium data center runs entirely on an advanced evaporative cooling system that draws grey water from a nearby industrial canal to reduce overall costs. Google’s Hamina data center in Finland uses a similar approach of using sea water from the Bay of Finland to reduce its cooling costs.

The need for data center expansion is rising due to the growing demand for cloud computing. The data centers comprise computer servers that process everything from Internet searches to email, inquiries to maps, videos and other services.

Google’s investment to expand its data center comes as no surprise given the need for more data-intensive services, such as Google search, Gmail, Google+ and YouTube in Europe. Currently, Google has 6 data centers in the U.S., 3 in Europe, and 3 under construction in Asia. Recently, Google unveiled its first data center project in South America, which will be located in Quilicura, Chile.

Gartner, an independent research firm in the U.S., estimates datacenter hardware spending to cross $126.2 billion in 2015. These technology warehouses are witnessing strength as video streaming, smartphones and apps require hard drives to run them.

Google delivered strong fourth quarter gross revenues (including TAC) of $14.4 billion, representing sequential and year-over-year increases of 2.3% and 36.2%, respectively. Excluding the $1.5 billion contribution from Motorola, revenues were up 21.9% from the year-ago quarter.

Currently, Google retains a Zacks Rank #2 (Buy). Other stocks in the sector that are performing well include Intersil Corporation (ISIL - Snapshot Report), Priceline.com Inc. (PCLN - Analyst Report) and Yahoo Inc. (YHOO - Analyst Report). While Yahoo holds a Zacks Rank #1 (Strong Buy), Intersil and Priceline carry a Zacks Rank #2 (Buy).

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