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Alphabet to Invest EUR 3B, Expand Data Centers in Europe

Alphabet Inc.’s GOOGL division, Google has been gradually expanding 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 the company’s expansion strategy, it plans to invest approximately 3 billion euros ($3.32 billion) over the next two years in data centers in Europe.

Notably, this move is inline with the company’s initiatives to expand cloud footprint globally. These facilities will cater to the surge in Internet usage and demand for data-storage capacity.

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.

Alphabet Inc. Price and Consensus

 

Alphabet Inc. Price and Consensus

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Other Investments

Since 2007, Google has been investing large amounts of money for the expansion of data centers in Europe.

In this regard, the company has invested approximately 15 billion euros in data centers in Europe. It also plans to invest 1 billion euros in renewable power in Belgium, Denmark and Sweden.

In addition, Google already has a data center in Hamina. The company plans to invest an additional amount of 600 million euros in the same site for further development.

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.

Google, being no exception, is expanding data centers to meet the requirement of more data-intensive services such as Google search, Gmail, Google+, YouTube, wearables and Internet of Things (IoT).

Growth Opportunity

Per a report from Research and Markets, the global data-center storage market is expected to grow $107.44 billion during the 2019-2023 period. We believe Google is well positioned to take advantage of the projected growth in this segment.

However, its expanding data center in Europe has intensified competition from the likes of Amazon AMZN, Microsoft MSFT, Apple, Facebook FB and Alibaba, which are also leaving no stone unturned to bolster presence in the region.

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.

Zacks Rank

Currently, Alphabet carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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