Google owner Alphabet Inc (NASDAQ:GOOG) reportingly acquiring cyber security titan Wiz might be the catalyst for a surge of M&A across the sector, broker Wedbush suggests.
Acquiring Wiz would give Google an edge on several cloud deployments and further monetise the cyber security cloud space with still less than 50% of the workloads not on the cloud globally.
“After falling behind Microsoft in the cloud arms race we have seen major traction from Google over the past year under Kurian around cloud success along with its core AI strategy.
“This Wiz deal would clearly bolster the Google Cloud offering and value proposition to enterprises.
“We would expect a flurry of tech M&A on the horizon.
"We have seen every Big Tech deal scrutinized over the past few years as the FTC and Lina Khan have aggressively been focused on blocking tech deals of all shapes and sizes from the likes of Amazon, Microsoft (e.g. Activision), Google, and Meta among others.
“In our view in the scenario that Trump wins the White House in November and a much weaker FTC and friendlier Beltway for deals, we would expect an accelerated M&A environment to take place for Big Tech and believe a potential Google/Wiz deal would be just the tip of the iceberg to a massive M&A cycle for Big Tech in 2025.
"That said, there is an arms race on the cloud and AI front and Big Tech stalwarts will continue to be aggressive on M&A and not shy away due to regulatory worries in our view following the Microsoft/Activision blueprint and victory.
“The cloud cyber security space is ripe for consolidation in our view with massive growth opportunity on the horizon heading into this AI Revolution.”