Why Google Bought Nest: Wall Street's Take

Tickers in this article: GOOG

NEW YORK ( TheStreet) --  Google's decision to buy smart thermostat and smoke alarm company Nest for $3.2 billion in cash came as a surprise to many Monday when the deal was announced. Almost 24 hours later, Wall Street is largely positive on the deal as it expands Google's reach into the home automation market, and continues to feed the beast that is Google and its ever growing need for more data.

Here's what Wall Street - including  TheStreet's Jim Cramer - had to say about the deal: 

TheStreet's Jim Cramer:

"Still, the fact remains that Google is buying a device that captures still one more aspect of the Internet in a way that makes your handheld device more valuable. The move shows that the company truly understands the psyche of the consumer: That is, anything that makes the consumer more connected to her device and the Internet with a Google interface has to be considered a win. That's especially considering that the most important do-it-yourself home retailer has already said that the customers can't get enough Nest smoke detectors.

What can I say? It's certainly a better use than Google's going to get from keeping the cash in the bank, and if it's part of a better mousetrap that drives you to a Google-powered device, then it is most definitely a win. "

Merril Lynch analyst Justin Post (Buy, $1,250 PT)

"Nest Labs existing products include: 1) thermostats that learns your schedule, programs itself and can be controlled from your phone, which could reduce energy cost by 20%; and 2) smoke alarms that gives early warning to provide users a heads-up, lights up yellow and speaks with a human voice (it tells where smoke is or when carbon monoxide levels are rising) before turning on a loud alarm. These connected household devices were a broad theme at CES and could provide Google with even more data about users. Coupled with Google's artificial intelligence technologies and Google voice, we expect a full array of interesting home products to come."

JMP Securities analyst Ronald Josey (Market Outperform $1,250 PT)

"With Nest, we believe Google is expanding its connected device strategy to the entire home. To date, most of Google's technology products have been media focused, such as the
Chromecast, Chromebook, and Android. Google announced its expansion into cars with the Auto Alliance at CES, and with Nest it is expanding to the home. With Internetenabled
devices expected to grow significantly over the next several years-Cisco (CSCO, MP) projects more than 50B connected devices by 2020-we believe Google is acquiring a head start by expanding to other areas of the home, collecting data, and we would expect Android to have a presence on Nest over time."