Google's $32 Billion Cloud Deal Has Implications for Several Holdings

Following up on our Alphabet GOOGL - Wiz comments in today’s Daily Rundown video, Alphabet signed a definitive agreement to acquire cloud security platform company Wiz, Inc. for $32 billion.

That’s a few billion dollars more than was being kicked around in the financial media on Monday, but as we noted in our video comments, Alphabet’s balance sheet cash position can fund that pretty easily.

As we suspected, the rationale for the transaction is for Wiz to augment Google Cloud’s security offering in an effort to alter the current playing field with Amazon’s AMZN AWS, Microsoft’s MSFT Azure, and others. Helping with that, Wiz is a platform trusted by more than 50% of Fortune 100 companies who already use its products and services, including customers include Agoda, Avery Dennison, BMW, Cushman & Wakefield, DocuSign, Mars, Plaid, Priceline, Salesforce and Slack.

Until the deal closes in 2026, Wiz will remain an independent company continuing to work with continuing to work with all major clouds, including AWS, Azure, Oracle ORCL and others. When closed, Wiz will be folded into Google Cloud, but it is expected to maintain full support as a multi-cloud solution, meaning it will continue to work with other cloud providers.

Implications for CIBR Shares

During Tuesday morning’s brief conference call to discuss the event, Google spoke to one aspect of our investment thesis for why the Portfolio owns First Trust Nasdaq Cybersecurity ETF CIBR shares:

"Security is a fundamental priority for CEOs and government leaders around the world. But the landscape is changing. The pace and impact of breaches are accelerating. AI brings new risks, but also new opportunities."

We continue to be bullish on the outlook for cybersecurity, especially as bad actors use AI to augment their efforts. For now, our CIBR price target remains $72, and we aim to review that as we move through the upcoming March quarter earnings season.

Implications for M&A activity

Generally speaking, a transaction like the Google-Wiz one tends to drive a wave of musical chairs M&A activity as companies look to shore up their capabilities as the playing field changes. With the Google-Wiz transaction ranking among the larger if not being the largest M&A deal announced this year, it’s another reason to think M&A activity could expand in the coming weeks.

Pairing that potential with our comments about upcoming IPO transactions and the more than 15% drop in the shares, we are upgrading Morgan Stanley MS to a One rating. Based on our $145 target, when MS shares move past $130, we may look to revisit that new rating. Between now and then if either M&A or IPO activity accelerates, it could lead us to revisit our MS price target.

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At the time of publication, TheStreet Pro Portfolio was long GOOGL, AMZN, MSFT, CIBR and MS.