Alphabet’s Google Inks Cloud Deals with SpaceX and PayPal

Alphabet’s (GOOGL) Google has won a pair of cloud computing contracts from Elon Musk’s SpaceX and digital payments giant PayPal (PYPL).

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SpaceX has tapped Google to provide the cloud infrastructure to deliver its satellite-based broadband service to global customers. The arrangement will see SpaceX’s internet subsidiary Starlink set up its ground stations inside Google’s data center facilities. Starlink operates more than 1,500 internet satellites.

While SpaceX is getting the infrastructure to deliver its satellite internet globally, Google hopes to provide a better experience to its cloud customers. They are aiming to launch the service for enterprise customers in the latter half of 2021.

“Applications and services running in the cloud can be transformative for organizations, whether they’re operating in a highly networked or remote environment,” said Google Cloud infrastructure executive Urs Hölzle.

In another big win for Google, the company will provide more cloud services to PayPal to enable the payments company to increase its capacity to process a larger volume of transactions faster. PayPal’s computing resource requirements increased dramatically during the pandemic as more people shifted to online shopping.

Notably, Google has won more cloud business from PayPal after it recently added PayPal as a payment option for some of its advertising clients. (See Alphabet stock analysis on TipRanks)

Citigroup analyst Jason Bazinet recently downgraded Alphabet stock to Hold from Buy and assigned it a price target of $2,415. Bazinet’s price target implies 8.34% upside potential over the current price.

The analyst downgraded Alphabet over concerns about its advertising business, saying growth is likely to slow down.

“Many investors believe ad intensity per dollar of economic activity is rising. We see little evidence of this,” said Bazinet.

Consensus among analysts on Wall Street is a Strong Buy based on 28 Buy and 2 Hold ratings. The average analyst price target of $2,769.59 points to 24.25% upside potential to current levels.

GOOGL scores a 7 out of 10 on TipRanks’ Smart Score rating system, indicating the stock’s returns will likely align with the market performance.