Software valuations are historically high, and AI companies are reaping outsized benefits. Valuations are bolstered by strong public markets, disruptive technology trends, and record cash levels in the hands of buyers.

Dealmaking activity in this space has grown immensely over the past decade, and that boom has really picked up steam in recent years. From 2020 to 2022, the volume of M&A transactions more than doubled. In the following years, the AI market continued to post steady growth. The trend became even more pronounced in 2025, as dealmaking activity experienced another significant surge. Deal volume growth in 2025 grew by an impressive 44% annually.

This upward momentum continued into 2026, with dealmaking activity expanding by 40% in the first half of the year compared to the same period last year, reaching 1,135. PE companies accounted for the buyer in about 20% of all transactions in H1 2026.

Buyers preferred to keep their M&A strategies private as only 15% of transactions disclosed their financial terms, keeping to historical trends. After the record numbers of 2025, total disclosed M&A deal value reached $119.3 billion in H1 2026. There were 5 megadeals reported in the first quarter of the year and 9 – in the second quarter, with the largest one reaching the $60 billion threshold. The median disclosed M&A deal size was $26 million.

Over the past few years, VC funding in AI companies has been volatile, and the recent surge in capital does not necessarily reduce pressure on founders to find strategic outcomes. While 2025 saw AI VC funding jump to $163 billion and deal volume rise, that influx also raised expectations around growth, valuation, and timing of returns. In 2026, first half investment reached $154.4B across 6,641 deals, but such pace may prove difficult to sustain and could intensify the gap between capital raised and realizable exit value. The median VC investment size in AI firms was $4 million, well below M&A levels.

From an M&A perspective, the funding surge may ultimately reinforce the importance of buyer appetite rather than diminish it. As more capital flows into AI, companies face higher performance thresholds, longer holding periods, and greater pressure to demonstrate durable commercial traction. In this environment, strategic and private equity buyers can offer a clearer path to scale, liquidity, and execution through M&A strategies compared to continued dependence on venture funding alone.

OpenAI dominated AI M&A activity in the first half of 2026, announcing 11 deals, followed closely by Thoma Bravo securing 10 deals, which signals aggressive consolidation from both a leading AI compay and PE powerhouse. United Kingdom-based PE HgCapital landed at the third place with 8 acquisitions, while the fourth place was divided between 3 more PE firms – Francisco Partners, Vista Equity Partners and Providence Equity Partners – and San Francisco-based agentic AI CRM provider Salesforce. Other notable buyers included strategics such as Swedish legal workflow software Legora, Californian data analytics platform Databricks, Israeli cybersecurity company Check Point Software Technologies, and Seattle-based online retailer Amazon, as well as 3 private equity companies – Blackstone, Permira and EQT Group, and 1 buy-and-hold buyer – Constellation Software.