Alphabet Inc.’s (GOOGL - Free Report) division, Google has been gradually expanding presence in the cloud market.
In sync with the company’s expansion strategy, Google plans to invest up to $2 billion to build a data center in Poland, per reports.
Notably, this move is in line with the company’s initiatives to expand cloud footprint globally.
We believe that the growing number of data centers will add efficiency to Google’s business as these will provide better storage for vast search data, emails, photos and most importantly, cloud data with advanced security.
Data Center Expansion Continues
The need for data-center expansion is on the rise due to growing demand for cloud computing and the ever-increasing needs of Internet users.
Moreover, the work-and-learn-from-home necessity is stoking demand for cloud services. Furthermore, the lockdown has increased the usage of online and e-commerce services globally. Therefore, the need to invest more in data centers to accommodate the demand spike for cloud services is the need of the hour.
Google, being no exception, is expanding data centers to meet the requirement of increasing cloud services.
Alphabet Inc. Price and Consensus
Google’s strategy of expanding data centers globally has intensified competition from 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 presence in the region.
Last month, Microsoft announced plans to invest $1 billion in Poland, including a new data center. The company aims to focus on teaching local people how to fully utilize the cloud. In addition, it will help startups, entrepreneurs and others with cloud services.In February, Microsoft announced plans of opening a datacenter region in Spain. Microsoft already has 60 cloud regions around the world.
Also, Amazon opened a datacenter region in Italy last week. A number of companies are expecting cloud usage to exceed prior plans due to the COVID-19 pandemic’s impacts. According to the ninth annual Flexera 2020 State of the Cloud Report, 59% of companies expect their cloud usage to be slightly or significantly higher than planned.
Nevertheless, Google is well positioned to take advantage of the projected growth in this segment. The expanding infrastructure will eventually boost the company’s position in the cloud computing market, which is currently dominated by the likes of Amazon and Microsoft.
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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