Alphabet Inc.’s cloud business alone is now worth almost twice the market value of IBM Corp., a leader in the space for decades, according to analysts at Deutsche Bank AG.
The bank values Alphabet’s Google Cloud at $225 billion, analysts led by Lloyd Walmsley wrote in a note to clients, saying the unit could report compound annual growth of 55% between 2018 and 2022, and reach annual sales of about $38 billion by 2025.
IBM, which reported cloud revenue of $19.2 billion in 2018, had a market capitalization of $126 billion at the close of trading on Wednesday.
“While Google Cloud has been lagging behind in the market and burning money historically, with increased confidence in the go-to-market and commercial traction under Mr. Kurian, we think it can grow market share,” they wrote. Former Oracle Corp. executive Thomas Kurian was named head of the division in November.
Deutsche Bank, which has a buy rating on Alphabet, raised its price target on the company to $1,600 a share, higher than any of the 45 analysts surveyed by Bloomberg.