Alphabet’s (GOOGL - Free Report) division Google is aggressively pursuing the expansion of its presence in Europe, in an effort to capitalize on the availability of vast natural and renewable resources in the northern part of the continent.
In sync with its expansion strategy, the company has announced its plans to set up a data center in Denmark which will be located just outside of Fredericia. This will mark the company’s fifth data center in Europe.
The search giant will invest EUR 600 million for the development of this new data center which is likely to be an energy efficient one. Google intends to leverage abundant green energy and renewable energy production in Denmark in order to keep its energy consumption free of carbon.
Google to Benefit
We believe the growing number of data centers will add efficiency to Google’s business as these will provide better storage for its vast search data, emails, photos and most importantly cloud data with advanced security.
Google’s concerted efforts toward increasing its data center number bode well for its strengthening position in the global cloud market. Per a report from Gartner, the global cloud infrastructure market is expected to reach $83.5 billion by 2021.
The above mentioned benefits are likely to aid the company in serving its customers more efficiently.
Apart from these, there are cost benefits as well which directly stem from the company’s green move. The cheap electricity generation from wind energy along with Google’s robust machine learning techniques will aid its cost optimization strategy.
Further, the company is looking into power purchase agreement to run its new data center on renewable energy. Notably, this green initiative will also minimize Google's carbon footprint.
As per a report from Research and Markets, global data center storage market is expected to witness a CAGR of 11.83% during the 2018-2022 period. Consequently, the tech giants worldwide are swarming to this market in order to capitalize on its immense potential.
Moreover, Google’s expanding data center in Europe has intensified the competition for the likes of Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) , Apple (AAPL - Free Report) , Facebook and Alibaba which are also leaving no stone unturned to bolster their presence in the region.
Amazon Web Services (AWS) rules the roster by owning 14 data centers in Europe. It has four data centers in Germany, three in Luxembourg and seven in Ireland. Further, the company recently announced its plans to open data centers in Italy.
Further, Microsoft also owns two data centers in France, one in Paris and the other one in Marseille. This has opened up a new horizon for Azure. Further, the company is planning to open its first data center in Switzerland.
Additionally, Alibaba’s cloud computing arm has two data centers in the European region, one in Frankfurt and other one in London.
Furthermore, Apple and Facebook have also revealed their plans of establishing data centers in Denmark.
Nevertheless, Google also owns four data centers in Belgium, Finland, Ireland and the Netherlands. Further, its latest initiative is likely to aid its competitive position against the above mentioned companies.
Currently, Alphabet 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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