Microsoft is on a multibillion-dollar shopping spree.
The company recently agreed to pay as much $19.7 billion for Nuance Communications, which provides artificial intelligence-powered assistance for health practitioners, in a deal that came not terribly long after its purchase of video game publisher Zenimax Media last year.
Meanwhile, Microsoft is said to be in exclusive talks to acquire online group chat platform Discord for as much as $10 billion, previously bid on the US operations of viral video app TikTok, and was reportedly in ill-fated talks with Pinterest for what would have been multibillion-dollar deal.
The company has the money to spend, ending its 2020 fiscal year with $136 billion cash on hand after the pandemic forced a shift to remote work and led to a boom in Microsoft‘s cloud and productivity software. Experts say that with its surging market cap of near $2 trillion — and its leading rivals slowed down by regulatory scrutiny — we can expect to see Microsoft open its wallet for companies large and small through the remainder of the year and beyond.
“Microsoft is on the M&A warpath over the next 12 to 18 months and Nuance could be the first step in an increased appetite for deals in 2021,” Wedbush Securities analyst Dan Ives said in a note to clients.
Insider asked nine industry analysts which companies might be next on Microsoft‘s shopping list as it looks to bolster its existing businesses and break into new ones via acquisition.
Some analysts say Microsoft could use M&A to shore up its cloud division, where it’s considered the number-two player behind market leader Amazon Web Services in cloud computing. That’s especially important as Google makes headway and IBM and Oracle are clawing out their own niches in the market.
It could also continue down the path laid by the Nuance deal and buy more AI startups, enhancing its presence in a key sector of tech. Other experts suggested that Microsoft look into startups in spaces as varied as geothermal energy or “rogue drone” removal. Some suggested that Microsoft could spend bigger than it ever has before on established names like Twilio, Okta, or even Twitter.
Here are 22 companies that analysts said would make sense for Microsoft to acquire. (All private company valuations were taken from Pitchbook unless otherwise noted, while data on public companies is accurate as of Friday afternoon.)