A Nvidia HGX H100 server at the Yotta Data Services Pvt. data center in Navi Mumbai, India, on Thursday, Mar. 14, 2024.
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Notable technology industry analyst Dan Ives says Big Tech companies and private equity firms are gearing up to make a flurry of acquisitions to stay ahead in the AI arms race. The analyst shared his picks for stocks that are prime acquisition targets as the dealmaking boom gets underway.
“With the regulatory landscape becoming more lenient to acquisitions with the new administrations stepping in and no longer representing steep hurdles, we believe that the tech M&A floodgates are ready to be opened as more opportunities arise to add accretive assets with an easier path forward,” Ives said late Wednesday note to Wedbush Securities clients.
Over the past few months, several technology firms have entered into deals to sell their businesses to AI and AI-adjacent firms. Core Scientific agreed in July to sell its data center business to CoreWeave in a $9 billion all-stock deal. Around the same time, Palo Alto Networks announced it would acquire CyberArk, an Israeli security firm valued at $25 billion, while NiCE unveiled plans to purchase consumer-focused generative AI company Cognigy for nearly $1 billion.
Ives pointed to C3.ai and Sandisk as being among the prime M&A targets, while Apple and IBM are most likely to be highly acquisitive during this AI merger wave because the two Big Tech companies are looking to play catch up in the AI race.
“While plenty of funding is expected to build AI use cases, we anticipate significant consolidation within the space over the next 5-10 years as more niche use cases for AI will be picked up and added to growing AI product portfolios from large-scale tech players and other financial buyers to capitalize on the exploding demand for AI across both enterprise and federal landscapes,” Ives wrote.
Here are the analyst’s top publicly traded takeover candidates.
Ives stock picks for AI-related M&A
Source: Wedbush Securities
Sandisk shares have surged more than 200% since the stock began trading under the ticker SNDK in February. Lyft and Tripadvisor are up 68% and 5% since the beginning of this year, respectively.
However, Tenable Holdings stock fell 26% this year, while C3.ai shares plunged 49% over the same period. Qualys shares slid roughly 6% in the year to date.
