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Alphabet to Invest EUR 600M, Expand Data Centers in Europe

Zacks Equity Research

Alphabet Inc. GOOGL division, Google has been gradually expanding its presence in Europe. It plans to open a new data centerin Hamina, Finland.

The company will invest EUR 600 million ($672 million) for the development of this new data center.

Notably, thismove is inline with the company’s initiative to extend its cloud footprint globally. These facilities will cater to the surge in Internet usage and demand for data-storage capacity.

We believe the growing number of data centers will add efficiency to Google’s business as these will provide better storage for its vast search data, emails, photos and most importantly, cloud data with advanced security.

Data Center Expansion Continues

Google already owns a data center in Hamina on the south coast of Finland. Currently, the company has 58 data centers around the world. Particularly in Europe, Google has five such facilities and has invested more than 4.3 billion euros since 2007.

The need for data-center expansion is on the rise due to growing demand for cloud computing and ever-increasing needs of Internet users.

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

Moreover, the company’s expansion into video gaming with its new streaming service — Stadia —will require it to boost its computing power exponentially. Stadia runs through the company’s YouTube video-streaming platform and requires the data-center network to function.

Growth Opportunity

As per a report from Research and Markets, the global data-center storage market is expected to witness a CAGR of 11.83% during the 2018-2022 period.

Therefore, most of the tech companies have been investing huge amounts to build more such facilities. Other firms, including Microsoft, have been making investments to built data centers in Europe.

We believe Google is well positioned to take advantage of the projected growth in this segment. The expanding infrastructure will eventually boost Google’s position in the cloud computing market, which is currently dominated by the likes of Amazon and Microsoft.

Alphabet Inc. Price and Consensus


Alphabet Inc. Price and Consensus

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

Zacks Rank & Key Picks

Currently, Alphabet carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Facebook, Inc. FB, IAC/InterActiveCorp IAC and AXT, Inc. AXTI, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.

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