Analyst: Why Google Could Buy Nutanix

Tech giant Alphabet Inc GOOG GOOGL should consider acquiring the enterprise cloud computing company Nutanix Inc NTNX to "scratch each other's itch," according to Trefis.

The Analyst

The interactive data and analysis platform firm Trefis commented on the companies in a Thursday note. 

The Thesis

Alphabet is the third-largest cloud company and should consider acquisitions to bolster its positioning, Trefis said in a research report.

Google has its own hybrid cloud platform, Anthos, but the company needs an established partner in the data center market to achieve its objective of reaching out to the private cloud, Trefis said. 

Nutanix would fit in with this objective, as it is the leader in hyperconverged infrastructure, the research report said.

The acquisition would also benefit Nutanix, as it is undergoing a slowdown in sales, partly due to salesforce-related problems and a transition toward a subscription business model.

"The cumulative impact of heightened hybrid technology and coupled with experience sales personnel could lead to an improvement in sales for the combined cloud sales for the two companies," the Trefis report said. 

The companies are no stranger to each other, as Nutanix's former chief product officer is now working at Google.

Brian Stevens, Google Cloud's vice president and CTO, sits on Nutanix's board.

Nutanix's cloud revenue is projected at $1.6 billion in 2020, and a multiple of four times P/S generates a fair value for the company at $6.3 billion — or 50% higher than its current valuation at around $4.25 billion, according to Trefis. 

Price Action

Alphabet Class A shares were up 2.55% at $1,212.46 at the time of publication Thursday, while Nutanix shares were higher by 4.48% at $24.38. 

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