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Alibaba's Cloud Growth Plan on Track with 4 New Facilities

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Alibaba Group Holding Limited (BABA - Free Report) is expanding its cloud presence beyond its stronghold, China, quite aggressively.

In its latest step toward international expansion, Alibaba Cloud, the cloud computing arm of Alibaba Group, has announced its plans to open four new data facilities outside China,by the end of the year.


The new data centers will be located in Japan, Germany, the Middle East and Australia. These new facilities will take Alibaba Cloud’s presence worldwide to 14 locations, including two facilities in the U.S.

The data center in the Middle East is located in Dubai. This facility started its initial operations on Nov 21 in a joint venture with Dubai-based holding company Meraas.

On the other hand, Alibaba’s Japanese data center is a joint venture with SoftBank,the Japan-based telecom subsidiary of SoftBank Group Corp. The two companies have formed a joint-venture cloud services company called SB Cloud Corporation, targeting the competitive cloud computing market in Japan.

To expand itself in Europe, Alibaba Cloud partnered with telecommunications company, Vodafone Germany, to open its first data center in Europe. The new facility is expected to cater to increasing demand for cloud computing services as the region seeks to accelerate the upgrade of its digital infrastructure.

Vice President of Alibaba Cloud Sicheng Yu said, “When opening overseas data centers, Alibaba Cloud tends to chose strong local partners wherever we go. He added that working with local companies helps reduce capital investment risk as, “We don’t know the market as well as the local partner does.”

Yu also said, “The new data centers will further expand Alibaba Cloud’s global ecosystem and footprint, allowing us to meet the increasing demand for secure and scalable cloud computing services from businesses and industries worldwide.”

Summing Up

As Alibaba focuses on international expansion, its efforts are directed worldwide, including South East Asia, Europe, Middle East and the U.S.

The company chooses to expand in relatively less-tapped markets and build its presence in places where, Inc. (AMZN - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Microsoft Corporation (MSFT - Free Report) are already well established.

According to Yu, “With the addition of the new centers, Alibaba Cloud now has a presence on every continent except Africa, South America and Antarctica.” He also added, “We will open more data centers around the world, based on markets and customer response, that’s for sure.”

The cloud computing segment in China is nascent, fast-growing and protected from competitors by the Chinese government. Given the growing position of Alibaba’s cloud business in China and aggressive international expansion strategies, we believe that cloud computing will be one of its major growth drivers in the long run.

At present, Alibaba carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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