Shares in up-and-coming tech firms could be in for a lift after ARK Invest’s Brett Winton claimed Google’s acquisition of cloud security start-up Wiz could spark a long-awaited revival in tech dealmaking.
Winton, chief futurist at ARK, said the $32 billion (£25 billion) purchase of the cloud security specialist was not just the largest in the search giant's history - it could also mark the start of a broader M&A cycle that benefits the whole innovation space.
ARK is a high-profile US investment firm known for backing disruptive technology stocks, led by star stockpicker Cathie Wood.
Speaking after Google announced the Wiz deal, Winton said: “Google just sneezed,” suggesting that other large tech firms might now follow suit.
“M&A cycles are contagious,” he added, arguing the transaction breaks a logjam caused by the Biden administration’s tough regulatory stance.
He also warned that antitrust restrictions may have inadvertently made dominant players stronger by shielding them from the need to compete for acquisitions.
Winton believes looser merger rules - should they materialise under a future Trump administration - could unleash hundreds of billions of dollars in deal activity.
He argues this would breathe life into smaller listed tech firms, whose shares have suffered from low takeover prospects and short selling.
A new gold rush could emerge if Alphabet Inc (NASDAQ:GOOG), Microsoft Corp (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) begin snapping up smaller, specialised companies to bolster their AI or cloud security offerings.
Google’s move for Wiz - a cloud security firm that helps companies manage vulnerabilities across multiple cloud providers - is widely seen as a play to differentiate itself from rivals like Microsoft Azure and AWS, which tend to lock customers into their ecosystems.
With Wiz, Google is positioning itself as the most multicoloured-friendly of the major providers - a move that could pay off as businesses increasingly demand interoperability, not vendor lock-in.