For Google, nobody beats The Wiz, Roth says

It’s bigger than Looker. Bigger than Motorola. Bigger than Nest. And it’s bigger than Fitbit. Nobody beats The Wiz.

The $32-billion acquisition of Wiz by Google parent Alphabet (Alphabet Stock Quote, Chart, News, Analysts, Financials NYSE:GOOGL), sets the company up in many silos that will be important in the future.

That’s the take from Roth analyst Rohit Kulkarni, who summarized the development in a research update to clients March 19.

“Yesterday, Alphabet announced that it has entered into an agreement to acquire the cybersecurity startup Wiz for $32bn in an all-cash transaction,” he wrote. “We believe Wiz is expected to hit $1bn in ARR in 2025. This acquisition marks the largest in Google’s history, surpassing its previous $12.5bn purchase of Motorola Mobility. We see this acquisition as a significant event ahead of potentially rising competition in AI cloud as cybersecurity offerings become mandatory “table stakes” for hyperscalers to secure both human & machine data and workloads.”

With the report, Kulkarni maintained his “Buy” rating and price target of $220.00 on GOOGL.

The analyst thinks GOOGL will post EPS of $9.89 per share on revenue of $390.0-billion in fiscal 2025. He expects EPS of $11.34 on revenue of $431.0-billion in fiscal 2026.

Kulkarni ran down what Wiz does and where it will fit in the Google ecosystem.

“Founded in 2020 by Unit 8200 alumni, Wiz specializes in cloud infrastructure security, scanning platforms like AWS and Microsoft Azure for risks. It rapidly scaled, reaching a $12bn valuation by May 2024. The company is VC backed by firms including Sequoia and Thrive, and aims to grow through GOOGL to reach $1bn revenue scale. Wiz’s technology enhances cybersecurity across cloud environments, a key factor in GOOGL’s decision to acquire the firm,” he wrote. “The acquisition strengthens Google Cloud’s security capabilities as it competes with Amazon (AMZN-Buy) and Microsoft (MSFT-NC). Wiz had previously rejected a $23bn offer from GOOGL, opting to focus on growth and a potential IPO. However, it resumed acquisition discussions, leading to this agreement. Wiz will operate under Google Cloud while maintaining its multicloud compatibility. Regulatory approval is pending, with scrutiny expected due to GOOGL’s ongoing antitrust challenges.”