Will Alibaba Use War Chest To Target Cloud Computing?

Grazed from Investors. Author: Reinhardt Krause.

Alibaba Group (NYSE:BABA) would face big challenges taking on U.S. cloud computing service giants, which have boosted capital spending to expand data centers globally, says Oppenheimer. A TechCrunch report speculated that Alibaba, which raised $25 billion in its initial public offering on Friday, could use its war chest to challenge Amazon Web Services, part of e-commerce leader Amazon.com (NASDAQ:AMZN); Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).

Oppenheimer analyst Tim Horan says Alibaba would be playing catch-up. "We believe that the three dominant U.S. cloud providers are years ahead of any potential competition," Horan wrote in a report. "Alibaba would almost certainly need to build out a massive data center infrastructure within the U.S. to gain any sort of traction, since we doubt U.S. enterprises would be willing to store their proprietary data in China regardless of cost…

Alibaba would also need to ensure that its services are reliable and that data could be accessed with low latency."…

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