Alibaba Group Holding Limited BABA is further 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 partnered with Istanbul-based B2B services provider e-Glober, to offer its cloud services in Turkey.
e-Glober is Turkey's sole authorized agent and already a business partner of global wholesale platform Alibaba.com.
Alibaba has had an impressive run on the bourse in the past year. The company's shares have gained 52.1%, outperforming its industry 's growth of 41.5%.
We expect international expansion to back the momentum going forward.
Per this partnership, e-Glober will deliver Alibaba Cloud's suite of services to various companies ranging from startups to medium-sized businesses. Alibaba's cloud services will include elastic computing, database services, networking, security and middleware services to its clients in Turkey.
The deal will help the businesses in the country to reduce their infrastructure costs and shorten the time period for their goods to reach the market. This will allow the Turkish companies to expand their geographic reach and better compete in the global trade.
In return, Alibaba will get an access to e-Glober's huge existing business customer base that consists of several exporters, small and medium-sized businesses, and other local companies in the online retail, multimedia and gaming sectors. It will give Alibaba a competitive edge against its rivals and further expand market share in the growing cloud market.
Yeming Wang, deputy general manager of Alibaba Cloud Global, said, "We aim to become the preferred cloud service provider for all sizes of business in Turkey by providing a full range of cloud solutions and combining this with E-Glober's local expertise."
Why This Move?
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. We believe that Alibaba, with its ongoing initiatives, is well poised to grab the growth opportunity.
Moreover, Turkey has been witnessing a strong demand for cloud-based services. There has been a rise in the adoption of cloud computing in the country.
According to a research firm IDC, Turkey's public cloud market was valued at US$96.93 million last year, ahead of other major markets in the region such as the United Arab Emirates ($82.56 million) and Saudi Arabia ($69.22 million).
Hence, Alibaba's decision to expand here in this country is the right move.
As Alibaba focuses on international expansion, its efforts are directed worldwide including South East Asia, Europe, Middle East and the United States.
In specific terms, Alibaba has expanded overseas to Singapore, Indonesia and Malaysia in Southeast Asia, Frankfurt, London and Paris in Europe, New York and San Mateo in the United States, Dubai in the Middle East, as well as Seoul, Tokyo and Sydney. It currently has more than 2.3 million customers worldwide.
In the last reported fiscal third quarter, the company's cloud computing business segment reported revenues of RMB3.6 billion, up 104% year over year. The increase was driven by a rise in the number of paying customers and higher-than-usual spending by them, reflecting increased usage of services.
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.
Alibaba Group Holding Limited Price and Consensus
Alibaba Group Holding Limited Price and Consensus | Alibaba Group Holding Limited Quote
Zacks Rank & Stock to Consider
Alibaba has a Zacks Rank #3 (Hold). Some better-ranked stocks in the technology sector are Stamps.com Inc. STMP , PetMed Express PETS and Agilent Technologies A . While Stamps.com sports a Zacks Rank #1 (Strong Buy), PetMed and Agilent carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Long-term earnings per share growth rate for Stamps.com, PetMed and Agilent is projected to be 15%, 10% and 11.2%, respectively.
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