Alphabet's Waymo Sets Up Self-Driving Unit, Expands in China

Alphabet Inc. 's GOOGL self-driving car division, Waymo, has set up a subsidiary in Shanghai, in a bid to expand the company's reach in China.

Per the filing with China's National Enterprise Credit Information Publicity System, Waymo has established a wholly-owned company called Huimo Business Consulting Co. in Shanghai's free trade zone on May 22.

The division is expected to carry out business and logistics consultancy in China, as well as design and test self-driving vehicle products and parts.

Notably, Alphabet's shares have returned 33.3% year to date, outperforming the industry 's growth of 3.7%.

China Expansion Continues

Alphabet has never had a great time in China. Since 2010, Google's search engine has been banned in the Chinese market along with its app store, email and cloud storage services.

Despite the strict Chinese policy that imposes increasingly strict rules on foreign firms, including new censorship restrictions, the search giant has been trying to enter this market by focusing on AI.

Waymo's entry is the latest in a series, marking a successful entry in China by Alphabet. Recently it was reported that Google intends to launch a censored search engine app called Dragonfly, targeting the Chinese market within the next 6-9 months.

Late last year, Google had announced its plans of opening a new research lab in China, dedicated solely to artificial intelligence (AI). It had teamed up with the local authorities in China to hold a five-day festival in the country. The event focused on human-versus-computer showdown in the ancient game of Go. It made efforts on getting developers in China trained and hooked on its AI building blocks.

We believe that these efforts will aid Google in re-building its presence in China going forward.

Will Alphabet Succeed in Rebuilding its Presence in China?

It is too early to guarantee a profitable business for Alphabet in China because of the strict rules and laws in the country that control the domestic internet, and block some foreign websites. Therefore, developers in China cannot access Google's AI tools and its cloud-computing business without overseas servers or technical tricks.

Secondly, Google will face stiff homegrown competition, primarily from Baidu Inc. BIDU and Alibaba BABA , in the race to create the most popular foundational tools for inventions like voice-controlled speakers and self-driving cars.

Alphabet Inc. Price and Consensus

Alphabet Inc. Price and Consensus | Alphabet Inc. Quote

Zacks Rank & A Key Pick

Currently, Alphabet has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Infineon Technologies AG IFNNY , carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Long-term earnings growth for Infineon Technologies is currently projected to be 7.5%.

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Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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