Software

Wiz deal could help Alphabet nail down the cloud

15 Jul 2024

At $23 bln, the cybersecurity firm would be the Google parent’s biggest acquisition, one antitrust regulators are likely to hate. It’s expensive too. But Alphabet is an underdog in cloud, where security is a big differentiator. Even with the risk of failure, the deal makes sense.

Smaller tech grapples with end of Big Tech put

12 Jul 2024

Software developers are trading at premium valuations, fueled at least in part by the idea that larger rivals will scoop them up. Alphabet’s decision not to buy $25 bln HubSpot, and greater antitrust resistance, indicates such outcomes are less assured. More disappointment looms.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

MicroStrategy is hedge funds’ favorite meme stock

2 Jul 2024

The $26 bln firm’s shares have leapt on a bitcoin buying binge, funded by bonds that can turn into stock. Unlike GameStop’s ragtag punters, MicroStrategy depends on hedge funds such as Citadel piling in. Thing is, they rely less on a rising share price than a wildly volatile one.

Nvidia customer’s valuation voodoo tests AI mania

2 Jul 2024

Germany’s $1.4 bln Northern Data has access to the US giant’s sought-after chips and makes money by renting them out. It may re-list parts of the business on the Nasdaq. If investors accept a mooted $10-16 bln price tag, it’s a sign the market has truly lost touch with reality.

The economics of AI points to value of good data

28 Jun 2024

Investors chasing the artificial intelligence boom have pushed up the value of $3 trln chip supplier Nvidia and big cloud computing firms. Yet AI models have dubious benefits unless they are trained on reliable information. Moreover, high-value data makes them cheaper to develop.

Olympic Games can withstand Atos farce

26 Jun 2024

The French firm managing the Paris sporting event’s IT backbone is close to bankruptcy. It may find 800 mln euros of short-term financing from President Macron’s government and loans even after creditors ditched restructuring talks. But its future after the Games is less certain.

Revolut’s desired $40 bln price tag is a stretch

24 Jun 2024

The UK fintech group wants to sell $500 mln of shares at a valuation far above its last level. To get to $40 bln, investors need to assume it’s like payment giant Adyen. With a lower margin and discounts warranted in other areas, Revolut’s value looks more like $20 bln.

The ragged end of private equity is unspooling

21 Jun 2024

Carlyle’s $7 bln purchase of Veritas was part of a multi-year software buyout frenzy, reaching over $100 bln in deals in 2022. Fueled by cheap debt, the bill is now due with rates up and results down, sparking a fight with creditors including feisty Elliott. It won’t be the last.

A warning from history about large-cap stock booms

21 Jun 2024

Five decades ago, shares in a handful of large companies like IBM and McDonald’s propelled the US stock market to new highs before collapsing. As investors pile into tech giants led by $3.3 trln Nvidia, the earlier period may be instructive for those who believe history rhymes.

Autodesk left a door ajar for its pushy investor

18 Jun 2024

Despite a plum niche developing software for architects, the $50 bln firm’s performance has sagged. Rabble-rouser Starboard Value has cookie-cutter fixes. But the company’s hand is weakened by poor disclosure that invites gripes about activists’ favorite target: executive pay.

Saudi expands strategic toolbox with Lenovo deal

29 May 2024

A PIF unit is the sole investor in the laptop maker’s $2 bln convertible bond. It pays no interest and can’t be swapped for stock until 2027. The real value to the kingdom is Lenovo’s pledge to build a new factory and regional HQ there to bolster Riyadh’s manufacturing goals.

CEO pay is hidden factor in US relisting trend

29 May 2024

Plumbing supplier Ferguson almost doubled its boss’s compensation after moving to New York, while $55 bln CRH is reviewing its remuneration after switching too. It’s not something boards like to talk about. But investors might support US-style pay if it attracts the best talent.

Snowflake’s growth story is worryingly typical

23 May 2024

The $55 bln software firm’s revenue is growing rapidly, partly because of AI initiatives, and investors are rewarding it. But marketing costs and stock-based pay are high, and semiconductors costs are rising. As tech newbies show, excitement based on sales growth often thaws.

AI will help treat Big Pharma’s looming illness

15 May 2024

Drug discovery is a long and costly process with success rates below 10%. Caps on prices and shorter patent periods in the US will also make life harder for the likes of Pfizer, AstraZeneca and rivals. Despite patchy results, betting on machines may be the best hope of a cure.

Arm encounters the AI bubble’s ups and downs

9 May 2024

The $110 bln chip designer reported record revenue in the fourth quarter, but investors disliked a less punchy outlook. Big Tech’s AI-fuelled data centre land grab is powering Arm’s revenue and margins. But its toppy valuation means any perceived upset gets punished.

France’s Atos entrée heads for fuzzy denouement

2 May 2024

The French state wants to buy the defence assets of the IT group, which is trying to restructure 4.9 bln euros of debt. It should then be easier to sell what’s left of Atos. But it’s unclear how or when Paris might marshal private buyers to recoup its outlay of up to 1 bln euros.

Amazon is the everything-plus-AI store

30 Apr 2024

The $1.8 trln company is still dominating e-commerce and cloud computing, as first-quarter earnings show. But its valuation trails Microsoft’s, which has plunged into AI. Boss Andy Jassy will play catchup in the coming year. But Amazon may not be as behind as investors think.

Thoma Bravo UK cyber deal looks a little too good

26 Apr 2024

The buyout firm finally agreed a takeover of long-term target Darktrace, an IT security specialist. Despite the generous-looking 44% premium on offer, the buyer’s returns seem juicy given a nascent US push. That may raise the chance of shareholders asking for more money.

Who can serve up the Goldilocks recipe for AI?

25 Apr 2024

Investors slapped down Facebook owner Meta for hefty spending on artificial intelligence with uncertain returns. Conversely, they have feted chipmaker Nvidia for its real-life revenue from AI tools. Microsoft and Alphabet are doing a decent job of landing in the middle.