Send me real-time posts from this site at my email

Why Nuance Communications Stock Surged Today

What happened

Shares of Nuance Communications (NASDAQ: NUAN) climbed 16% on Monday after Microsoft (NASDAQ: MSFT) announced an agreement to purchase the artificial intelligence-powered speech-recognition company.

So what

Microsoft will pay $56 per share for Nuance, or roughly 23% above its closing price on Friday. The all-cash deal values the speech technology leader at $19.7 billion when factoring in its debt.

Nuance's tech will bolster Microsoft's healthcare cloud offerings. Its software uses conversational AI to improve the accuracy of its medical transcription services. Its tools are currently used in 77% of U.S. hospitals.

Image source: Getty Images.

Acquiring Nuance will double Microsoft's total addressable market in the healthcare industry to a staggering $500 billion.

"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," Microsoft CEO Satya Nadella said in a press release. "AI is technology's most important priority, and healthcare is its most urgent application."

The transaction is expected to close by the end of 2021, subject to regulatory and shareholder approval.

Now what

Unlike its rivals Amazon and Alphabet, which have drawn the ire of antitrust regulators, Microsoft has remained on the hunt for large-scale acquisitions. In addition to Nuance, Microsoft is reportedly attempting to buy chat app Discord. It also recently made overtures at social media platforms Pinterest and TikTok. Microsoft, in turn, has emerged as a favored suitor for tech companies seeking a larger partner.

"We need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable, and effective connections to people and care," Nuance CEO Mark Benjamin said. "The path forward is clearly with Microsoft -- who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference."

10 stocks we like better than Nuance Communications
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Nuance Communications wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of February 24, 2021

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso owns shares of Amazon and has the following options: long January 2023 $2400.0 calls on Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Microsoft, and Pinterest. The Motley Fool recommends the following options: long January 2022 $1920.0 calls on Amazon and short January 2022 $1940.0 calls on Amazon. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue