Google’s Mountain View, Calif., headquarters (Marcio Jose Sanchez, Associated Press)
SAN FRANCISCO — Google parent Alphabet shares soared after the Internet giant says it’s making a major push into the booming cloud computing business to take on Amazon.
Shares hit an all-time high of $756.60 on Friday.
Google is consolidating its cloud businesses into a single group to be led by named VMware co-founder and tech industry veteran Diane Greene.
“This is an important and fast-growing area for Google and we’re investing in the future,” Google Chief Executive Sundar Pichai said in a blog post on Thursday.
Google is buying Greene’s start-up Bebop Technologies, which helps make it easier to build and maintain enterprise applications. Greene, the former VMware chief executive who sits on the board of directors of Google parent company Alphabet, will bring her Bebop team to Google to join in the effort to take market share from cloud leader Amazon.
Google is taking on market leader Amazon as well as Microsoft which is ramping up its cloud computing business and IBM which is also a formidable player.
“This is a salvo across the bow of every competitor that Google is serious as they move forward into this new frontier, focusing their resources on taking advantage of the huge market opportunity that cloud offers,” Forrester Research analyst Rob Stroud said after the news broke Thursday.
Urs Hölzle, Google’s senior vice president of infrastructure, said this week at a tech conference that the company’s cloud revenues could surpass advertising revenue in five years.
“The goal is for us to talk about Google as a cloud company by 2020,” Hölzle said on stage at the Structure conference in San Francisco.
These ambitions excite investors who want to see Google diversify into lucrative new areas. Advertising generates nearly 90% of revenue for Alphabet. Cloud and other businesses are categorized as “other” revenue.
Cloud services are a cash cow for Amazon. The Internet giant for years has struggled with profitability as a retailer, but Amazon Web Services mints money.
Follow USA TODAY senior technology writer Jessica Guynn @jguynn
