Alphabet, the parent company of Google (GOOGL), is reportedly in advanced discussions to acquire cybersecurity startup Wiz for approximately $23 billion, as reported by The Wall Street Journal citing insider sources. This potential acquisition would mark Google’s largest ever and accelerate its expansion into the cybersecurity sector.
According to the WSJ report, a deal for Wiz, established in 2020, could be finalized soon. Earlier in May, Wiz secured $1 billion in funding, valuing the startup at $12 billion. The company achieved $350 million in annual recurring revenue in 2023.
The acquisition of Wiz holds strategic significance for Google, particularly in bolstering its cloud-computing division, which trails behind Amazon Web Services (AMZN) and Microsoft’s (MSFT) Azure in the competitive cloud market. Microsoft, although strong in cybersecurity, has faced challenges with cybersecurity breaches affecting its Azure platform.
However, any Google-Wiz deal is likely to face rigorous regulatory scrutiny amid heightened antitrust actions against major tech firms by both the U.S. and European Union authorities.
Wiz has made significant strides in the rapidly growing Cloud Native Application Protection Platform (CNAPP) market, which Bank of America predicts will grow from $7.2 billion in 2023 to $16.3 billion by 2027, reflecting a 24% compound annual growth rate.
Moreover, Wiz specializes in conducting comprehensive assessments of entire cloud environments, utilizing extensive data to identify potential attack vectors.
Google’s previous acquisitions in the cybersecurity realm include the $5.4 billion purchase of Mandiant in 2022, renowned for its expertise in detecting and responding to state-sponsored cyberattacks, and Siemplify, a company focused on threat detection and automated response, acquired for $500 million in the same year.
In 2024, Google’s stock has surged by 32%, but experienced a 2.9% decline last week, breaking a five-week winning streak after reaching a record high. The company is set to report its second-quarter earnings on July 23, a pivotal moment for investor sentiment.
A potential acquisition of Wiz by Google could also impact other cybersecurity stocks positively. Previously, Google was linked to acquisition talks with marketing software maker HubSpot (HUBS), but negotiations reportedly ended recently, leading to a decline in HUBS stock.
HubSpot, headquartered in Cambridge, Massachusetts, specializes in sales and marketing software tailored for small and midsize businesses.