Alphabet Inc. (NASDAQ:GOOG) is Buying Its Way Into Cloud Computing Contention

Alphabet Inc. (NASDAQ:GOOG) is Buying Its Way Into Cloud Computing Contention

Alphabet Inc. (NASDAQ:GOOG) is Buying Its Way Into Cloud Computing Contention

With Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) core advertising business slowing, the internet search giant has turned its attention to the cloud computing market — and for good reason. 

That area of the market has been enjoying double-digit growth with more of the same projected in the coming years. According to market research firm Gartner, the worldwide cloud computing market will reach $331.2 billion by 2022, up from $249.8 billion in 2020. 

As it stands, Amazon‘s (NASDAQ: AMZN) cloud unit Amazon Web Services (AWS) is the industry leader, but Microsoft (NASDAQ: MSFT) is chipping away at that dominance with Azure.

Google has ambitions to be the first- or second-place cloud provider in the coming years and hopes to capture $25 billion in yearly sales. To meet that end, it has embarked on a cloud computing overhaul that includes a buying spree.

The latest acquisition: Cornerstone Technology, which Google purchased this month for an undisclosed sum. Cornerstone aids customers in moving off a mainframe and into the cloud. It’s the latest in a string of acquisitions that included its $2.6 billion acquisition of Looker Data Sciences, which Google made in June. 

Google Cloud wants to be among the leaders

The buying spree is part of Google Cloud head Thomas Kurian’s strategy to grow the unit into a serious threat to AWS and Azure. In addition to acquisitions, Kurian is restructuring the unit, including reducing the headcount. Earlier this month, Google Cloud confirmed it laid off a small number of workers, largely as part of a restructuring of how it approaches international markets. 

The moves come a year after Kurian took over the reins of Google Cloud with a stated mission to grow it into a serious contender to Amazon and Microsoft. To do that, Kurian said at a recent Goldman Sachs conference that Google is going after the retail, healthcare, financial services, media and entertainment, and industrial and manufacturing markets. The selling point for using Google Cloud is that businesses get access to its artificial intelligence and data analysis expertise, and don’t have to worry about sharing data with a rival.

To stand out from its competitors, Google Cloud is positioning itself as a software company, which it is betting will attract larger customers and thus more revenue. It’s also reportedly setting its sights on China, which is attractive because of its size. 

As it stands, Google has an uphill battle given its 6% market share at the end of the fourth quarter. That pales in comparison to AWS, which had market share of 32.4% as of the end of 2019. Microsoft ended the year in second place, controlling 17.6% of the market. 

But with demand for cloud services projected to see double-digit yearly growth,  it does provide a lot of opportunities for Google to enter the fray and succeed. Sure, it’s a latecomer, but there’s a lot of business that remains to be had. It can also exploit its rivals’ flaws to provide a real alternative.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 1,384.57.

The projected lower bound is: 1,250.42.

The projected closing price is: 1,317.50.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 4.2693. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 26.42. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 22 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -190.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 7 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.

Rex Takasugi – TD Profile

ALPHABET INC C closed down -75.090 at 1,318.090. Volume was 101% above average (neutral) and Bollinger Bands were 113% wider than normal.

Open     High      Low     Close     Volume___
1,362.0601,371.7041,317.1701,318.090 2,978,300
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,460.63 1,430.02 1,257.08
Volatility: 39 30 29
Volume: 1,755,447 1,633,407 1,450,585

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALPHABET INC C gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
ALPHABET INC C is currently 4.9% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of GOOG.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GOOG.O and have had this outlook for the last 2 periods. Our momentum oscillator is currently indicating that GOOG.O is currently in an oversold condition.

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