Alphabet (GOOGL) Boosts APAC Cloud Reach With New Data Center

Alphabet’s GOOGL division Google is making every effort to bolster its global cloud footprints on the back of its expanding network of data centers.

This is evident from Google’s latest plans to open a data center in Japan in 2023, which would mark its third such establishment in Asia. Notably, the facility will be located in Inzai, Chiba.

The company aims to offer seamless access to its cloud services to customers in the country on the back of the new data center.

The data center will boost digitization in Japan, and will likely strengthen the connection between the country and the global economy.

With the latest move, Google has expanded its presence in the Asia Pacific (APAC) region. It bodes well for the company’s growing efforts of rapidly penetrating the booming APAC cloud space.

This is likely to contribute well to the performance of Google Cloud in the days ahead.

Notably, Google Cloud revenues rose 35.6% year over year to $6.3 billion, accounting for 9% of the total revenues in second-quarter 2022.

The expansion of Google Cloud, which has become an integral part of Alphabet, is likely to help it win investors’ confidence in the near term.

Coming to the price performance, Alphabet has lost 29.5% on a year-to-date basis compared with the broader Zacks Computer and Technology sector’s decline of 33.2%.

Alphabet Inc. Price and Consensus


Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Growth Prospects in APAC

APAC, which is an emerging market for cloud technology, has been under the spotlight for the past few years.

Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) are gaining strong momentum in APAC.

Several companies in APAC have already migrated their workloads to the cloud and many are in the process of migration. The firms are highly focused on the development of digital transformation solutions through the cloud to cater to the increasing customer demand.

The pandemic-led remote and hybrid working pattern has been fueling the demand for cloud computing solutions in the region.

According to a report from Research and Markets, the cloud market of the APAC region is expected to witness a CAGR of 15.6% between 2021 and 2027.

Competitive Scenario

Given the upbeat scenario, not only Google but also cloud bigwigs, including Amazon AMZN, Microsoft MSFT, and Alibaba BABA, are making every effort to strengthen their cloud services, data center network, availability zones and regions in a bid to gain a strong footprint in the APAC.

In 2021, the opening of a region in Jakarta, Indonesia, which comprises three availability zones, and the second region in Osaka, Japan, by Amazon’s cloud computing arm — Amazon Web Services (“AWS”), remains noteworthy.

The company intends to set up an infrastructure region in Auckland, New Zealand, which will comprise three availability zones. It is also planning to launch a second AWS region in India’s Hyderabad by mid-2022. The region will also comprise three availability zones.

AWS is planning to set up a second AWS region in Australia’s Melbourne, which is expected to be operative in the second half of 2022. It also intends to open an infrastructure region in Tel Aviv, Israel, by 2023.

Microsoft’s Azure gears up to open five data centers in APAC, namely Southcentral India, Indonesia Central, Malaysia West, New Zealand North and Taiwan North, which will be located in Hyderabad, Jakarta, Kuala Lumpur, Auckland and Taipei, respectively.

Recently, Microsoft Azure launched a cloud availability region in China, namely China North 3, which marks the fifth of its kind in the country and the first comprising multiple availability zones.

Meanwhile, Alibaba is hugely investing in expanding its presence in the cloud market of the underlined region. The launch of Alibaba Cloud’s third data center in Indonesia remains noteworthy.

Nevertheless, Google’s strong efforts to increase the number of cloud regions, along with data centers, are likely to continue bolstering its APAC footprints. The company recently opened a data center in Singapore, which remains noteworthy. The company’s opening of cloud regions in India’s New Delhi and Australia’s Melbourne last year remains positive.

At present, Google is gearing up to open three cloud regions in the region, which will be located in Malaysia, Thailand and New Zealand.

It is also set to introduce cloud regions in Dammam, Saudi Arabi; and Doha, Qatar and Tel Aviv, Israel.

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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