Google Boosts Reach in Cloud & Telehealth With Amwell Deal
Alphabet’s GOOGL Google Cloud is investing $100 million in Amwell — a telehealth company that enables seamless virtual doctor visits.
Notably, Amwell, which has filed for IPO, chose Google Cloud as its preferred cloud partner and will migrate some of its video performance capabilities to it.
Additionally, the company will shift parts of its business that are currently loaded on Amazon’s AMZN AWS to Google Cloud.
We believe the search giant is expected to benefit well from its latest investment. The deal is expected to open newer avenues for Google in booming cloud and telehealth markets during the ongoing pandemic situation.
Cloud Benefits to Note
The latest move will bolster Google’s cloud customer base and aid the performance of its cloud division that has become an integral part of its overall business.
Moreover, the stock is riding on its strengthening cloud unit, which drove revenues significantly during second-quarter 2020.
Notably, Google cloud revenues grew 43.2% year over year to $3 billion, accounting for 7.9% of quarterly revenues.
Further, Amwell shifting its business from AWS to Google Cloud will help Google in challenging the cloud dominance of Amazon.
Also, Google’s strengthening cloud clientele is likely to boost its competitive position against other major players including Microsoft’s MSFT Azure, International Business Machine’s IBM cloud platform and Alibaba’s cloud division.
Additionally, Google Cloud being selected as the preferred cloud provider of Amwell bodes well for its growing momentum among the medical customers. The company’s existing medical customer base includes the likes of Mayo Clinic and Ascension among others.
Alphabet Inc. Revenue (TTM)
Prospects in Telehealth
We note that the social-distancing protocols and shelter-in-place restrictions that have been enforced worldwide to curb the spread of coronavirus highlight the significance of telehealth and telemedicine.
Per a report from MarketsandMarkets, telehealth market is likely to hit $25.4 billion in 2020 and reach $55.6 billion by 2025. Further, the market is expected to see a CAGR of 16.9% between 2020 and 2025.
This investment in Amwell will position Google well to capitalize on immense growth opportunities present in the telehealth space.
Notably, Amwell, which has ties with 2,000 hospitals and supports 55 health plans, has witnessed tremendous jump of 1,000% in visits owing to COVID-19 restrictions. Moreover, its revenues in the coronavirus-hit first-half of 2020 surged 77%.
Per the deal, both Google and Amwell are planning to upgrade the latter’s telehealth service with more Machine Learning skills.
We believe the latest move of Google remains noteworthy in the promising telehealth market.
Currently, Google’s parent 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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