Remarks on recent Google earnings calls have suggested the Google Cloud Platform will see increased focus in 2016 with Google Chief Executive Sundar Pichai saying that they intend to invest substantially in 2016.”

Alphabet Chief Financial Officer Ruth Porat refers to it as a place where they’ve prioritized investment.”

The questions this raises for us and customers are: 1) Does this amount of increased investment represent a substantial drag on Google’s financials?; We triangulate around amounts of spending, review product introductions, and hypothesize on what it’d take for Google to make serious inroads into AWS’ company, as Google reveals little here.

When it comes to geographical buildout, Google has declared that it intends to add over 10 new areas through the buildout of new data centers beginning with data centers in Japan and Oregon in the the next couple of months. In addition , we find that Google’s merchandise road map offers favorable distinction from AWS with it focus on Platform-as-a-Service (PaaS) and next-generation cloud services as highlighted by its recently established Cloud Machine Learning Platform that is built upon Google’s industry standard machine learning engine, TensorFlow. All these developments are backed up with big name customer add-ons (notably [closely held] Snapchat, [privately held] Spotify and some of Apple’s ( AAPL ) company).

AWS’ lead seems prohibitive, yet. Amazon’s amount of geographical and investment scale is almost five times that of our present approximation that is Google, looking at many times, and only the last two years that of other suppliers. Also, as it now stands, we see Amazon’s lead in market share, abilities, and geographical scale as developing a flywheel effect whereby businesses and/or programmers can embrace core AWS functions like Compute and ultimately transition into newer services including Redshift (a data warehousing service), QuickSight (company analytics), or Lambda/Elastic Beanstalk, making AWS a more total-service PaaS offering as opposed to just infrastructure. As Amazon has brought a host of managed service associates in addition to AWS, the ecosystem around their products has necessarily grown more powerful. Consequently, we’re seeing exponential increase in AWS use (quantified by the variety of IP addresses allocated to AWS EC2 according to Gartner), most recently headlined by Salesforce.com ( CRM ), who recently expanded their partnership with AWS.

In our view, Google’s Cloud investment appears more focused on infrastructure and tools versus the sales head count needed to help Google garner greater Cloud market share, which we base on job posting other business share information and information. Moreover, a look at possible acquisition candidates shows that just a little handful of firms could provide actual business sales capacity immediately, but there are challenges here, also. As result, we have a tendency to see AWS’ company as being under risk that is competitive than we did previously, which our new approximations better represent.

On higher sales growth and market share premises, our AWS valuation, which relies on a 10-year discounted cash flow, increases to about $150 billion (or $309 a share) from $120 billion, formerly. We continue to view Amazon as among the finest center long term thoughts in our coverage.