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Google Rolls Out Sole-Tenant Nodes, Expands Services Portfolio

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Alphabet’s (GOOGL - Free Report) division Google is leaving no stone unturned to strengthen presence in the rapidly expanding cloud market with its innovative solutions and products.

The company’s cloud computing arm, Google Cloud, has recently unveiled the Beta availability of sole-tenant nodes on Google Compute Engine. This will aid in non-sharing of servers with other customers while launching a virtual machine (VM).

This new solution aims at facilitating the launch of VM instances of any shape hassle free and efficient for the users. Its placement algorithm helps the users to find the appropriate location to launch their instances. Further, the users also have the option to select the location of their launch manually.

All these features will help the company in attracting new customers to the Google Cloud’s platform which will help in improving its market share. This will further aid top-line growth.

Coming to the price performance, shares of Alphabet have returned 8.4% on a year-to-date basis, against the industry’s loss of 2.5%.



Intensifying Cloud War

With the latest launch, the company is likely to gain competitive edge against Microsoft’s (MSFT - Free Report) Azure and Amazon’s (AMZN - Free Report) AWS.

Microsoft Azure has also single tenant options named G5-series virtual machines and D15 v2 instances, which provide single VM per physical host for memory-intensive applications.

Further, AWS also provides a similar kind of service called Dedicated Hosts and Dedicated Instances. It also provides physical hardware to be deployed for VM instances.

Consequently, we believe Google Cloud will continue to gain popularity in the market with the support of its innovative skills and expanding portfolio of cloud services. Although AWS retained its position as the leader in cloud market in the recently reported quarter, Google Cloud and Azure have also performed well.

According to data from Synergy Research Group, in first-quarter 2018, AWS’ market share was the highest, which came in 33%. However, AWS did not witness any year-over-year growth in market share. Nevertheless, Azure seized 13% market share in the first quarter, up from 10% in the year-ago period.

Also, Google cloud improved its market share on a year-over-year basis. It accounted for 6% of the market share, which increased from 5% in the year-ago quarter.

Google Cloud Gaining Traction

Google is gaining momentum in the cloud market with help of its expanding services portfolio and effective pricing strategy. Google Cloud now generates more than $1 billion of sales per quarter.

Per Markets and Markets data, cloud enterprise market is expected to reach $34.42 billion by 2022 by growing at a CAGR of 28.6% between 2017 and 2022.

The sole-tenant nodes are useful in cases where companies have to follow strict compliance and regulatory restrictions. Consequently, the latest solution is likely to gain traction among these kind of companies.

Further, the company’s recent buyout of Cask Data enables it to improve the productivity of cloud customers by offering data processing services.

We note that new innovative services will continue to benefit the market position of Google by improving its clientele. Also, they will continue to help the company to reap benefits from this growing market.

Zacks Rank & Stock to Consider

Currently, Alphabet carries a Zacks Rank #3 (Hold).

A better-ranked stock that can be considered in the broader technology sector is Akamai Technologies (AKAM - Free Report) which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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