Google’s acquisition of cybersecurity startup Wiz could be a turning point for an uncertain IPO market and a mergers and acquisitions environment aching from a slowdown in deal activity.

Alphabet announced Tuesday that it plans to buy the Israeli cybersecurity startup for $32 billion in its biggest acquisition ever. The deal came months after an initial $23 billion offer fell through and Wiz CEO Assaf Rappaport touted plans for an initial public offering.

While deal activity has slowed from its 2021 heyday, appetite has begun to pick up. 

SailPoint went public in February and CoreWeave, which sells Nvidia’s AI processors, said in a Thursday filing that it plans to raise up to $2.7 billion in its IPO that’s expected this week. Ticket vendor StubHub filed for an IPO Friday.

Wiz’s blockbuster deal could signal the opening of the floodgates for the IPO and M&A markets. 

Cybersecurity companies look particularly poised to win as companies hunt for ways to shield their highly profitable business models. CB Insights on Tuesday said cybersecurity solutions are one of the top acquisition target areas for 2025.

“Having a more complete offering for securing workloads in the cloud — that’s the core, the rationale behind [the Wiz] deal,” said Merritt Maxim, Forrester vice president and research director.

AI driving demand for more cybersecurity

The proliferation of artificial intelligence and the transition to the cloud has amplified the need for cybersecurity solutions.

More adept hacking schemes have accelerated since OpenAI’s launch of ChatGPT in late 2022, expediting the need for cutting-edge solutions to fend off attackers. That’s made cybersecurity a key target area for companies looking to protect their business models, said Neil Barlow, partner at the law firm Clifford Chance.

“Hacks and phishing could effectively cause a business to crash,” said Barlow, who focuses on private equity M&A. “This is a business that is fundamental to operating, so cybersecurity has been a resilient area for quite some time.”

While megacap technology giant’s haven’t shied away from cybersecurity investments, AI tailwinds have forced companies to beef up their offerings. Google’s Wiz acquisition could force rival Amazon to make its own acquisition, Maxim said. Potential targets include startups Aqua Security, Orca Security and Sysdig.

“The Google-Wiz tie-up does give them some capabilities that make them stronger than AWS in some areas,” Maxim said. “AWS could target acquisitions to potentially bring their solution closer to Google.”

What’s next for the IPO market

Wiz’s mammoth buyout may dampen near-term sentiment for cybersecurity startups with IPO aspirations, but experts told CNBC they anticipate a pickup in the second half of the year.

One of those contenders is malware and phishing software maker Proofpoint, which told CNBC in October that it was exploring an IPO in the next 12 to 18 months. The company went private in 2021 in a $12.3 billion acquisition by private equity firm Thoma Bravo.

Forrester’s Maxim said Proofpoint and Illumio are companies ripe for IPOs in the coming months. Illumio, which offers data center and cloud security, was a member of CNBC’s Disruptor 50 list in 2017 and 2018.

Netskope, which also offers cloud security, is another company being closely watched for an IPO, said Brianne Lynch, head of market insight at EquityZen. Netskope told The Wall Street Journal last year that it was planning an IPO in the second half of 2025. The company may start to feel pressure from early investors hunting for liquidity 13 years after its founding, Lynch said.

Snyk, a cybersecurity startup founded about a decade ago, has also alluded to a public offering next year. The company was last valued at $7.4 billion and CEO Peter McKay said in a post last year that Snyk had crossed $300 million in annual recurring revenues.

The big question is whether now is the rip-the-band-aid off moment for companies that decide to IPO or whether market volatility will cause companies to once again kick the can down the road, Lynch said. 

China is embracing open-source AI models in a trend market watchers and insiders say is boosting AI adoption and innovation in the country, with some suggesting it is an ‘Android moment’ for the sector.

The open-source shift has been spearheaded by AI startup DeepSeek, whose R1 model released earlier this year challenged American tech dominance and raised questions over Big Tech’s massive spending on large language models and data centers. 

While R1 created a splash in the sector due to its performance and claims of lower costs, some analysts say the most significant impact of DeepSeek has been in catalyzing the adoption of open-source AI models. 

“DeepSeek’s success proves that open-source strategies can lead to faster innovation and broad adoption,” said Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, noting a large number of firms have implemented the model. 

“Now, we see that R1 is actively reshaping China’s AI landscape, with large companies like Baidu moving to open source their own LLMs in a strategic response,” she added. 

On March 16, Baidu released the latest version of its AI model, Ernie 4.5, as well as a new reasoning model, Ernie X1, making them free for individual users. Baidu also plans to make the Ernie 4.5 model series open-source from end-June. 

Experts say that Baidu’s open-source plans represent a broader shift in China, away from a business strategy that focuses on proprietary licensing. 

“Baidu has always been very supportive of its proprietary business model and was vocal against open-source, but disruptors like DeepSeek have proven that open-source models can be as competitive and reliable as proprietary ones,” Lian Jye Su, chief analyst with technology research and advisory group Omdia previously told CNBC.

AI models that call themselves open-source had existed before the emergence of DeepSeek, with Meta‘s Llama and Google‘s Gemma being prime examples in the U.S. However, some experts argue that these models aren’t really open source as their licenses restrict certain uses and modifications, and their training data sets aren’t public.

DeepSeek’s R1 is distributed under an ‘MIT License,’ which Counterpoint’s Sun describes as one of the most permissive and widely adopted open-source licenses, facilitating unrestricted use, modification and distribution, including for commercial purposes.

The DeepSeek team even held an “Open-Source Week” last month, which saw it release more technical details about the development of its R1 model. 

While DeepSeek’s model itself is free, the start-up charges for Application Programming Interface, which enables the integration of AI models and their capabilities into other companies’ applications. However, its API charges are advertised to be far cheaper compared with OpenAI and Anthropic’s latest offerings.

OpenAI and Anthropic also generate revenue by charging individual users and enterprises to access some of their models. These models are considered to be ‘closed-source,’ as their datasets, and algorithms are not open for public access.

In addition to Baidu, other Chinese tech giants such as Alibaba Group and Tencent have increasingly been providing their AI offerings for free and are making more models open source.

For example, Alibaba Cloud said last month it was open-sourcing its AI models for video generation, while Tencent reportedly released five new open-source models earlier this month with the ability to convert text and images into 3D visuals.

Smaller players are also furthering the trend. ManusAI, a Chinese AI firm that recently unveiled an AI agent that claims to outperform OpenAI’s Deep Research, has said it would shift towards open source.

“This wouldn’t be possible without the amazing open-source community, which is why we’re committed to giving back” co-founder Ji Yichao said in a product demo video. “ManusAI operates as a multi-agent system powered by several distinct models, so later this year, we’re going to open source some of these models,” he added.

Zhipu AI, one of the country’s leading AI startups, this month announced on WeChat that 2025 would be “the year of open source.”

Ray Wang, principal analyst and founder of Constellation Research, told CNBC that companies have been compelled to make these moves following the emergence of DeepSeek.

“With DeepSeek free, it’s impossible for any other Chinese competitors to charge for the same thing. They have to move to open-source business models in order to compete,” said Wang. 

AI scholar and entrepreneur Kai-Fu Lee also believes this dynamic will impact OpenAI, noting in a recent social media post that it would be difficult for the company to justify its pricing when the competition is “free and formidable.”

“The biggest revelation from DeepSeek is that open-source has won,” said Lee, whose Chinese startup 01.AI has built an LLM platform for enterprises seeking to use DeepSeek.

OpenAI — which started the AI frenzy when it released its ChatGPT bot in November 2022— has not signaled that it plans to shift from its proprietary business model. The company which started as a nonprofit in 2015 is moving towards towards a for-profit structure.

Sun says that OpenAI and DeepSeek both represent very different ends of the AI space. She adds that the sector could continue to see division between open-source players that innovate off one another and closed-source companies that have come under pressure to maintain high-cost cutting-edge models. 

The open-source trend has put in to question the massive funds raised by companies such as OpenAI. Microsoft has invested $13 billion into the company. It is in talks to raise up to $40 billion in a funding round that would lift its valuation to as high as $340 billion, CNBC confirmed at the end of January.

In September, CNBC confirmed the company expects about $5 billion in losses, with revenue pegged at $3.7 billion revenue. OpenAI CFO Sarah Friar, has also said that $11 billion in revenue is “definitely in the realm of possibility” for the company this year.

On the other hand, Chinese companies have chosen the open-source route as they compete with the more proprietary approach of U.S. firms, said Constellation Research’s Wang. “They are hoping for faster adoption than the closed models of the U.S.,” he added. 

Speaking to CNBC’s “Street Signs Asia” on Wednesday, Tim Wang, managing partner of tech-focused hedge fund Monolith Management, said that models from companies such as DeepSeek have been “great enablers and multipliers in China,” demonstrating how things can be done with more limited resources.

According to Wang, open-source models have pushed down costs, opening doors for product innovation — something he says Chinese companies historically have been very good at.

He calls the development the “Android moment,” referring to when Google’s Android made its operating system source code freely available, fostering innovation and development in the non-Apple app ecosystem.

“We used to think China was 12 to 24 months behind [the U.S.] in AI and now we think that’s probably three to six months,” said Wang.

However, other experts have downplayed the idea that open-source AI should be seen through the lens of China and U.S. competition. In fact, several U.S. companies have integrated and benefited from DeepSeek’s R1. 

“I think the so-called DeepSeek moment is not about whether China has better AI than the U.S. or vice versa. It’s really about the power of open-source,” Alibaba Group Chairperson Joe Tsai told CNBC’s CONVERGE conference in Singapore earlier this month. 

Tsai added that open-source models give the power of AI to everyone from small entrepreneurs to large corporations, which will lead to more development, innovation and a proliferation of AI applications.

The Securities and Exchange Commission’s years-long crusade against the crypto industry appears to be over.

The final chapter closed on Wednesday, when Ripple announced that the SEC had officially dropped its four-year-old lawsuit against the company. The suit, filed on Jay Clayton’s last day as SEC chair, accused Ripple of raising $1.3 billion through the sale of its XRP token without registering it as a security.

Crypto companies and exchanges Coinbase, Kraken, Robinhood, Binance, and OpenSea all previously saw lawsuits or investigations dropped, resolved or put on hold. Ripple is now taking a victory lap.

“Ripple stands alone as the company that fought back — and won on essential legal questions — throwing a major wrench into the SEC’s plans to destroy crypto in the U.S. through enforcement,” Ripple Chief Legal Officer Stuart Alderoty told CNBC in an emailed statement. “The SEC has now abandoned its appeal in our case. In a fitting irony, Ripple was the first major case they brought and will now be the last one they walk away from.”

XRP was created in 2012 as one of the first non-bitcoin cryptocurrencies. It was started by the founders of the company Ripple, and became the platform’s native currency. Like bitcoin, XRP can be bought and sold by retail investors. XRP jumped about 11% after Wednesday’s announcement.

Ripple spent $150 million battling the government in a bruising legal standoff with former SEC Chair Gary Gensler, whose approach to crypto was widely viewed as hostile. In July 2023, a federal judge ruled that XRP is “not necessarily a security on its face,” undercutting the foundation of the SEC’s case.

The win wasn’t just a turning point for Ripple. It signaled to the crypto industry that the tide was turning, and built momentum for a movement that helped return President Donald Trump, a former crypto critic, to the White House. A year after the judge’s ruling, Trump, as Republican nominee, delivered a keynote at the annual Bitcoin Conference, and announced that he was “laying out my plan to ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world.” 

Ripple and its crypto peers were major contributors to Trump’s campaign. The president has spent his first two months in office paying them back.

On Friday, the SEC hosted its first major crypto roundtable, signaling a new approach of regulation through engagement, rather than enforcement. Leading the effort is Hester Peirce, who is helming the regulator’s newly established Crypto Task Force.

Peirce’s message to the industry is that the SEC is no longer an adversary, but is instead trying to give crypto a clear, lawful framework.

In a major policy reversal, the SEC rescinded Staff Accounting Bulletin 121 — a controversial rule that required banks to treat crypto assets as liabilities on their balance sheets. Introduced in 2022 and championed by Gensler, the rule was widely viewed as a major barrier to institutional adoption of bitcoin and other digital assets.

“Bye, bye SAB 121! It’s not been fun,” Peirce wrote on in a post on X after the change was announced in January.

At the World Economic Forum in Davos, Switzerland that month, CEOs from Goldman Sachs, Morgan Stanley, and Bank of America signaled that the thaw in Washington could lead to renewed crypto engagement.

And at the White House, David Sacks, Trump’s AI and crypto czar, stood beside the president as he signed an executive order on digital assets. Sacks had recently attended the Crypto Ball as part of the inauguration, where he declared, “The war on crypto is over.”

Coinbase’s lawsuit was dismissed in February. Then came Kraken. The SEC pulled back from its Wells Notice against Robinhood’s crypto division. The investigation into Binance is on hold.

Ripple’s legal team long argued that the SEC’s strategy wasn’t about upholding the law, but about using it as a blunt instrument. The regulator sent subpoenas to foreign regulators that worked with Ripple, demanded troves of documents from business partners and even sued CEO Brad Garlinghouse and co-founder Chris Larsen personally. Those charges have also been dropped.

“While this chapter is closed, the fight for clear, fair, and transparent crypto regulation continues,” Alderoty told CNBC. “Ripple will continue to lead that fight.”

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