MW Google plans to buy cybersecurity company Wiz for $32 billion. Why the startup is so valuable.

By Emily Bary

Wiz was founded only five years ago but has a compelling executive team and offers an increasingly important cloud-security service as cyber risks grow

Alphabet Inc. plans to conduct its largest deal ever - a $32 billion acquisition of cybersecurity company Wiz.

According to Alphabet $(GOOG)$ $(GOOGL)$, which announced the deal on Tuesday morning, the addition of Wiz will "vastly improve how security is designed, operated and automated - providing an end-to-end security platform for customers, of all types and sizes, in the AI era."

What makes the acquisition announcement notable isn't just the price tag. It's also that Google intends to pay that much for a cloud-security company founded only five years ago.

How did Wiz get so valuable so fast? There are a number of factors working in the company's favor, according to analysts - including rapid revenue growth, a compelling executive team and a product lineup that makes it easier for customers to detect vulnerabilities in their cloud operations.

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First, there's the financial profile. After annual recurring revenue clocked in at $500 million in August 2024, Wiz targets $1 billion on the metric during 2025, co-founder Roy Reznik told CNBC last year.

More-established cybersecurity companies, meanwhile, are projected to show less rapid growth in annual recurring revenue. In February, Palo Alto Networks Inc. (PANW) projected growth of 31% to 32% on the metric for this fiscal year within its next-generation security business. That said, Palo Alto Networks expects that number to be upward of $5 billion, about five times what Wiz may do.

Then there's the executive lineup, which includes Dali Rajic, the company's president and chief operating officer. He used to be the COO at Zscaler Inc. (ZS), which itself is valued at $31 billion. Rajic's arrival in February 2024 likely "has quickly served to accelerate and support what was already a rapid growth trajectory," Deutsche Bank analyst Brad Zelnick wrote last year.

Co-founder Assaf Rappaport is the company's chief executive, bringing earlier experience leading Microsoft Corp.'s $(MSFT)$ cloud-security group. According to his Wiz biography, he has "led Wiz to become the fastest-growing cybersecurity and software company in the world."

In 2023, Manhattan Venture Partners' research head, Santosh Rao, noted that Wiz was the fastest emerging-growth-technology company to achieve a valuation of $10 billion or more. Then the company conducted a tender offer last year that valued it at $16 billion, according to the Wall Street Journal.

Rao noted that Wiz plays into the business of cloud-native application protection platforms, known in the industry as CNAPP. The company has been able to capitalize on growth in multi-cloud environments, which feature services from various cloud providers. While companies see benefits in diversifying their cloud operations and bringing together different strengths, the multi-cloud wave also adds risk that needs to be managed.

Cloud-native security offerings can offer better protection than traditional ones, according to Rao's report, since they can help developers find issues with code, security endpoints and other areas. CNAPP offerings are also "better aligned with the development process of cloud software, allowing for tighter integration of app security throughout the entire development process," he added.

Google reportedly entertained a $23 billion deal for Wiz last summer. The company's interest in now doing a deal at $32 billion could reflect Google's "relatively weak enterprise offering in the cloud that could expand and strengthen [the Google Cloud Platform]" and help it win business versus Amazon.com Inc.'s $(AMZN)$ AWS and Microsoft's Azure, according to Mizuho desk-based analyst Jordan Klein.

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Wedbush's Daniel Ives took a similar view. "After falling behind Microsoft in the cloud arms race we have seen major traction from Google over the past year under [Google Cloud CEO Thomas Kurian] around cloud success along with its core AI strategy," he wrote. "This Wiz deal would clearly bolster the Google Cloud offering and value proposition to enterprises."

Evercore ISI's Kirk Materne added that "seeing bigger hyper-scalers buy 'up the stack' is one of the likely trends as agentic AI gains a foothold in the enterprise market." Agentic AI refers to the idea that we will see more AI "agents" that can do tasks autonomously next to human workers.

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-Emily Bary

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March 18, 2025 09:43 ET (13:43 GMT)

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