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Alibaba Partners With ABU Sports, Opens New Doors for Cloud

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Alibaba Group Holding Limited’s (BABA - Free Report) cloud computing arm, Alibaba Cloud recently partnered with Asia-Pacific Broadcasting Union Sports Network (ABU Sports Network) to offer its cloud computing infrastructure and cloud services for helping ABU Network work more efficiently.

The deal provided an innovative cloud-based solution to the ABU Sports Network for transmitting live video, and audio of the Asian Games (held in Indonesia from Aug 18 to Sep 2) to territories such as Fiji, Cambodia and Mongolia.

The solution gives ABU Sports unlimited, high-definition recording space on Alibaba Cloud’s platform on demand, helping it operate more efficiently, including supporting other large-scale sports events even in the future.

Notably, its shares have gained 2.3% in the past 12 months compared with the industry’s growth of 45.8%.

 

Our Take

The move indicates that Alibaba is working on boosting the cloud platform and expanding its presence in the world of sports. Last year, Alibaba Group partnered with the International Olympic Committee to leverage cloud technologies for digitizing sports operations.

However, the company needs to buck up, as competition in the cloud computing market is intense, particularly with players like Amazon already ruling, and Microsoft and Alphabet determined to strengthen their positions in the fast-growing segment.

Cloud still remains an expanding market with high growth prospects. In a recent report, Gartner projected the public cloud market to reach $411.4 billion by 2020. According to International Trade Administration, the Chinese cloud market is likely to touch $20 billion mark by 2020, witnessing a compounded annual growth rate of 40%.

We believe that Alibaba, with its ongoing initiatives, is well poised to grab the growth opportunity and cloud computing will be one of its major growth drivers in the long run.

Zacks Rank and Stocks to Consider

Alibaba currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same industry include Infineon Technologies AG (IFNNY - Free Report) , ON Semiconductor Corporation (ON - Free Report) and Rambus Inc. (RMBS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Infineon Technologies, ON Semiconductor and Rambus is currently projected to be 7.5%, 13.2% and 10%, respectively.

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