Amazon.com, Inc. (AMZN) Plans to Buy Israeli Chip Maker And Tech Startup Annapurna Labs

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In a round of capital investments from all the major tech giants, Amazon.com, Inc. (NASDAQ:AMZN) has joined the bandwagon with initial speculations of acquiring an Israeli tech startup company. The online retailer is likely to spend up to $370 million and the new company would be a part of Amazon Web Services.

Annapurna Labs is a chipmaker receiving regular funding from ARM Holdings plc (ADR) (NASDAQ:ARMH) and venture capitalist firm Walden International. Avigdor Willenz is the owner of the company and the company calls itself “a cutting edge technology startup.” Annapurna Labs has raised millions of dollars in multiple rounds of private funding until now.

As per Israeli financial newspaper, Calcalist, Amazon.com, Inc. (NASDAQ:AMZN) and Annapurna Labs are undergoing the final negotiations. Under the deal, Amazon would be required to establish a Research and Development Center in the country. Despite of being a technology startup, Annapurna Labs has worked in secrecy and nobody is aware of its current product portfolio. However, there are speculations that the company is working on platform for datacenters, which could be an exciting product for Amazon.com, Inc. (NASDAQ:AMZN).

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Apart from the current deal, Amazon Web Services has received new evaluation of $32 billion from leading financial research firm Piper Jaffray. One of the most important factors influencing this evaluation is the 44 percent growth in the revenues of Amazon Web Services in 2014. It is important to consider that Amazon.com, Inc. (NASDAQ:AMZN)’s Web Services are the largest provider of cloud computing services ahead of tech giants like Google Inc (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT).

The acquisition of Annapurna Labs would strengthen Amazon Web Services further and despite of announcing lower-than-expected quarterly results in the last two quarters, the online retailer has attracted higher price targets. Piper Jaffray has a price target of $400 per share whereas BCG Partners have revised their price target to $340 for Amazon.

This article has been written by Prakash Pandey.

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