The problem with having cloud computing companies as subsidiaries of regular computing companies comes from how easy it is to underestimate their size. Google’s parent company, Alphabet, owns a lot of the cloud computing market share. However, not many are familiar with how much the business is worth. Most experts within the field only see the bigger competitors like Amazon and Microsoft. Their presence is arguably more significant within the cloud computing space, with many relegating Alphabet’s contributions to third place.
In recent reports done by Deutsche Bank, researchers discovered that most of the cloud market misunderstood Google’s business operations regarding the Cloud. According to the reports, Alphabet’s cloud offering is likely to offer 7% of its pre-tax revenue by 2021. They further subdivide the business operations of the Cloud into Google Cloud Platform, and G Suite (which is where things like Gmail and Google Docs are located). Calculating the market share that the internet giant has and calculating backward, researchers determined that, at current, Google cloud’s business is worth around $225 billion.
Closing the Gaps on Their Competitors
Does Google Cloud Services have the ability to close the gap on their closest tech rivals? The changes that Google Cloud chief Tom Kurian has been making seems to suggest that they are willing to try. While most Fortune 500 companies haven’t really considered Google’s Cloud as a solution, the changes made by Kurian are making it a lot more likely that these companies will see the benefit of utilizing Google’s services.
Investors, in particular, should look at Google’s Cloud business in reference to its share price. The market has valued the cloud business at zero, meaning that these insights flip that valuation on its head. Google’s Cloud is likely to contribute a lot to the company’s overall growth within the coming year. For investors who are looking at buying before the price skyrockets, now would prove a valuable entry point.