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. In 2023, the number of deals increased by 10% compared to the previous year, reflecting a steady rise in market engagement. This upward momentum continued into 2024, with dealmaking activity expanding by 21% on an annual basis.

The trend became even more pronounced in 2025, as dealmaking activity experienced another significant surge. Growth in 2025 doubled relative to the previous year, resulting in a remarkable 44% increase in deal volume. This substantial spike highlights the rapidly growing interest and activity within the AI sector, as both strategic and financial buyers continue to pursue technology-driven opportunities with increasing enthusiasm. PE companies accounted for the buyer in about 21% of all transactions in 2025, and they continued to climb to the top of the M&A leaderboard throughout the year.

Buyers preferred to keep their M&A strategies private throughout 2025 as only 15% of transactions disclosed their financial terms, keeping to historical trends. Total disclosed M&A deal value reached up to $206 billion, finally beating the record numbers of 2021. There were 7 megadeals reported in Q1, 9 in Q2, 17 in Q3, and 11 in Q4, including 4 megadeals worth north of $10 billion.

Over the past few years, VC funding in AI companies has been volatile, as have deal volumes. However, in 2025, the situation took a positive turn as AI VC funding deal value spiked significantly, reaching $227 billion in invested capital. Deal volumes increased as well.

From an M&A perspective, this surge in VC funding coincided with a remarkable acceleration in dealmaking activity within the AI sector. In 2025, M&A deal volume doubled compared to the prior year, resulting in a 44% increase—underscoring the sector’s growing attractiveness for both strategic and financial buyers. As previously mentioned, the total reported value reached $206 billion, surpassing the previous record set in 2021. The combination of heightened VC investment and robust M&A activity demonstrates a maturing market where both growth capital and consolidation strategies are shaping the competitive landscape of AI.

By the end 2025, private equity firm Thoma Bravo became the most active buyer, making 17 acquisitions in the AI space. It was followed by another investor – HgCapital, which made 13 acquisitions. The third position was led by Salesforce and TA Associates which made 10 acquisitions each. Furthermore, Vista Equity Partners took the fourth position with 9 acquisitions. Other notable buyers include strategics such as IBM, ServiceNow, and OpenAI, as well as private equity companies – Hellman & Friedman, TPG Capital, KKR, Insight Partners, and EQT.