Israel’s Government Inked $1B Cloud Services Deal with Amazon, Google

On Monday, the government of Israel entered a deal with tech giants, Amazon Web Services (AWS) and Alphabet’s (GOOGL) Google worth $1 billion, in which the companies will offer cloud services for the country’s public sector and military, according to Reuters.

Per Finance Ministry officials, the cloud data services are likely to start in two months, though the system will not be centralized as data will be provided by two companies, and some data will not be moved to the cloud.

Notably, around a month ago, Amazon’s (AMZN) cloud division and Google won the tender for the four-phase project called “Nimbus”.

Other bidders included Microsoft (MSFT), Oracle, and IBM.

The multi-year project is expected to support the government, the defense system, and other groups in the economy with a comprehensive solution for the provision of cloud services.

The four phases included in Nimbus are acquisition and construction of cloud infrastructure, formulation of the government policy for migrating to the cloud, integration, and migration, along with control and optimization of cloud activities.

The data center regions will be established by AWS and Google over the next two years. Meanwhile, both companies will provide services via cloud infrastructure positioned in the Netherlands, Germany, and Ireland. Notably, the tenure of providing services is for a minimum of seven years and a maximum for 23 years. (See Alphabet stock analysis on TipRanks)

These cloud projects are expected to create full-time employment for around 3,000 Israelis. Furthermore, the promotion of Israel’s innovation and the creation of an ecosystem in cloud technologies are also anticipated, per the source.

According to the ministry, the new move of making available cloud services in Israel is likely to transfer significant government services, which will aid in the capitalization of the technological advantages in the cloud improving services for citizens and augmenting economic efficiency.

On May 17, Monness analyst Brian White reiterated a Buy rating and a price target of $3,000 (27% upside potential) on Alphabet.

White said, “There is no company on the planet more at risk of a breakup than Alphabet. Moreover, privacy has become more important to users, and politicians have grown increasingly concerned over the impact of Big Tech on U.S. culture. Thus, we expect Alphabet’s tone and innovation announcements this week to take into consideration the company’s precarious position.”

Alphabet shares have rallied 66.1% over the past year, while the stock still scores a Strong Buy consensus rating based on 26 Buys versus 2 Holds. That’s alongside an average analyst price target of $2,778.32, which implies 17.7% upside potential to current levels.

Additionally, Alphabet scores a 9 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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