Market Overview

A Few Highlights From Google's Cloud Event

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The first day of Alphabet Inc (NASDAQ: GOOGL)’s Google Cloud Next 2017 Conference in San Francisco didn’t bring new products, pricing changes or growth metrics. But, the event is expected to bring more news on the product front on March 9. The Conference is held between March 8 and 10.

Day 1 Highlights

The company flagged GCP (Google Cloud Platform) more as a home for “lift and shift” legacy workloads instead of only cool new applications. In fact, Google focused more on site/workload reliability, a clear dig at AWS (Amazon Web Services) which suffered from a high-profile outage last week.

“Google, like AWS, is clearly now targeting the big part of the cloud TAM represented by large enterprises moving traditional workloads,” Deutsche Bank analyst Lloyd Walmsley wrote in a note.

Walmsley noted that customers are first using GCP for Big Data analytics and new machine learning workloads, with BigQuery traction really picking up, and said “it is an accomplishment for GCP to have carved out an edge here.”

Challenge As Well As Opportunity

The analyst acknowledged the challenge (also an opportunity) for GCP is to win share from Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT)’s Azure in the much larger market for hosting conventional and legacy IT workloads, where AWS remains dominant.

“While GCP is getting there, progress is slow and needs to come via more mature GCP services, stronger sales and support and compatibility with incumbent vendors such as Oracle Corporation (NYSE: ORCL),” Walmsley highlighted.

Further, the analyst said checks didn’t pick up any signs of a slowdown in enterprise demand for cloud infrastructure services, while the tone about Microsoft was more muted than his expectations.

“In terms of incumbents, the color on Oracle and the firewall vendors was negative, and was more constructive for Splunk Inc (NASDAQ: SPLK) and New Relic,” Walmsley added.

Walmsley maintained his Buy rating and $1,100.00 price target on Alphabet, which closed Wednesday at $853.64.

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