When IBM on Thursday said it plans to acquire analytics software provider DemandTec for $440 million in cash, it became yet another large technology company to acquire a smaller tech name that specializes in cloud computing, leading some to think the future of tech is in “the cloud.”
Earlier this week, SAP AG announced plans to purchase Web-based software company SuccessFactors while Cisco Systems introduced CloudVerse, a framework that allows customers to operate on the cloud. These deals and developments may be getting a lot of attention on Wall Street now, but trader Zachary Karabell doesn’t think that will be the case for long.
“At some point in the next year we’re going to stop talking about this thing called “cloud computing” in that basically everything is going to a virtualized or multi-dispersed world of computing that is not either server or hard drive-based in a physical location,” explained Karabell, president of RiverTwice Research and RiverTwice Capital. “That’s just the nature of this next wave of technology, so in so far, all of these companies have to be present in it.”
Trader Patty Edwards agreed with Karabell, noting the trend is not unlike what’s happening in the biotechnology and pharmaceutical sectors, where large companies are letting the smaller names develop the products before buying them up. To play the trend toward cloud computing, Edwards recommends investors buy a basket of small cloud plays rather than focus on individual names. She didn’t offer any examples, though.
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Trader disclosure: On Dec. 8, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns C; Adami owns GS; Adami owns MSFT; Adami owns INTC; Adami owns AGU; Adami owns NUC; Adami owns BTU; Najarian has long call spreads AAPL; Najarian has long call spreads MSFT; Najarian has long call spreads IBM; Najarian has long call spreads MCD; Najarian has long call spreads HAL; Najarian has long call spreads RIG; Najarian has long call spreads CAT; Najarian is long CIGX; Najarian is long CME; Najarian is long CBOE; Kelly is long Euro; Kelly is long Italian bonds; Kelly is long IWM
For Patty Edwards
Trutina Financial is long GLD
Trutina Financial is long MCD
Trutina Financial is long COST
Trutina Financial is long CME
Trutina Financial is long INTC
Trutina Financial is long AMZN
Trutina Financial is long AAPL
Trutina Financial is long HAL
For Tom Ajamie
No disclosures
For Tim Butler
No disclosures
CNBC.com with wires.
