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M&A Watch: Buy Alphabet Stock Amid Plans to Acquire Cybersecurity Startup WIZ?
GOOGAlphabet(GOOG) ZACKS·2025-03-27 21:30

Core Viewpoint - Alphabet's acquisition of cybersecurity startup Wiz for 32billionaimstostrengthenitspositionincloudsecurityandAI−drivensolutions,despitethestockremainingflatsincetheannouncement[1][2].AcquisitionDetails−Thedealisexpectedtoclosenextyear,pendingregulatoryapproval,andwillbeAlphabet′slargestacquisitiontodate,surpassingthe32 billion aims to strengthen its position in cloud security and AI-driven solutions, despite the stock remaining flat since the announcement [1][2]. Acquisition Details - The deal is expected to close next year, pending regulatory approval, and will be Alphabet's largest acquisition to date, surpassing the 12.5 billion purchase of Motorola Mobility in 2012 [2]. - Wiz, founded in 2020, has rapidly scaled to achieve 100millioninannualrecurringrevenue(ARR)within18monthsandisprojectedtoreach100 million in annual recurring revenue (ARR) within 18 months and is projected to reach 700 million in ARR by 2024, with a private market valuation of 12billion[3].Wiz′sMarketPosition−Wiz′sinnovativecybersecurityfeaturesincludereal−timeagentlessvisibilityandriskprioritization,anditscustomerbaseincludesmajorcloudproviderslikeGoogleCloud,AWS,andAzure,aswellasoverhalfoftheFortune100companies[4][3].−TheacquisitionreflectsAlphabet′swillingnesstopayapremiumforWizduetoitssignificantcustomerbaseandrapidgrowth[4].Alphabet′sFinancialHealth−Alphabethas12 billion [3]. Wiz's Market Position - Wiz's innovative cybersecurity features include real-time agentless visibility and risk prioritization, and its customer base includes major cloud providers like Google Cloud, AWS, and Azure, as well as over half of the Fortune 100 companies [4][3]. - The acquisition reflects Alphabet's willingness to pay a premium for Wiz due to its significant customer base and rapid growth [4]. Alphabet's Financial Health - Alphabet has 95.65 billion in cash and equivalents, with total assets of 450.25billion,significantlyexceedingtotalliabilitiesof450.25 billion, significantly exceeding total liabilities of 125.17 billion, indicating strong financial health to support the acquisition [5]. Google Cloud Growth - Google Cloud has been Alphabet's fastest-growing segment, with revenue increasing by 30% to 11.95billioninthelastquarter,andoperatingincomesoaring14211.95 billion in the last quarter, and operating income soaring 142% to 2.09 billion compared to the previous year [7]. - Google Cloud accounted for 12% of Alphabet's total revenue last year, amounting to 43.2billion,a6443.2 billion, a 64% increase from 26.28 billion in 2023 [8]. Future Outlook - The acquisition of Wiz is seen as a strategic move to enhance Alphabet's capabilities in the competitive landscape of cloud computing, cybersecurity, and AI, potentially leading to lucrative returns in the future [11].