Artificial intelligence has moved from science fiction to reality in the blink of an eye. It is just three years since US technology company OpenAI launched ChatGPT publicly, but the first generative AI model to capture global attention—100 million users signed up within two months of launch—kickstarted an arms race. Every organization now recognizes the opportunities AI creates, and the pressure to embrace transformation is acute.
In practice, the AI label spans multiple technologies, from automation and productivity tools to GenAI models able to create new content. Agentic AI, where AI-powered “agents” can make autonomous decisions and complete tasks independently, is also evolving rapidly. But in aggregate, this is a sector growing at breakneck pace. Research from UN Trade and Development suggests the global AI market was worth US$189 billion in 2023 but will grow 25-fold to US$4.8 trillion by 2033.
Moreover, AI is an economy-wide phenomenon, with businesses in every sector exploring its potential. For example, financial services giants such as Visa and Mastercard are increasingly using AI to tackle fraud and boost cybersecurity, while investment banks hope to manage risk more effectively, and life sciences companies put AI to work to accelerate drug discovery.
Tech in the lead
Unsurprisingly, however, AI is driving most activity in the technology arena. On both sides of the Atlantic, M&A activity in the sector is surging, with much of the deal boom driven by demand for AI technology and expertise.
In the first three quarters of 2025, the overall tech sector saw almost 5,700 deals worth US$711 billion globally, up from US$558 billion and US$468 billion of deals in the whole of 2024 and 2023, respectively. At the time of writing (November 27), this year’s figures had risen to 6,540 deals worth US$878 billion.
US on a tear
AI-related deal activity in the US is growing faster than anywhere else. By the end of the third quarter, 412 transactions worth US$117.4 billion had been announced—both volume and value figures far outstripping full years 2023 and 2024. At the time of writing (November 27), these had increased to 466 deals worth US$157.3 billion.
This value surge has arrived on the back of a string of megadeals, headed up by March’s fundraise at OpenAI, which saw a consortium led by the Japanese investment group SoftBank commit US$40 billion to the company, racing to stay ahead of rivals constantly iterating their own GenAI models.
Elsewhere, Facebook owner Meta unveiled a US$14.8 billion investment in Scale AI, aimed at boosting its access to the data needed to train AI models.
Meanwhile, Anthropic, another leading name in the GenAI space, raised US$13 billion. The latest funding round was led by asset management firm ICONIQ, alongside a raft of other investors including Fidelity Management & Research Company and Lightspeed Venture Partners.
Europe: Smaller deals but growth abounds
In Europe, meanwhile, AI-driven M&A activity has also proved robust during 2025. The first three quarters of the year saw deal value reach US$7.8 billion from 210 transactions, already beyond full-year totals for the previous two years. At the time of writing (November 27), volume had grown to 230 deals worth a total of US$8.1 billion.
While the pace and size of M&A growth in Europe are more modest than in the US, with fewer megadeals driving the market, many of the same deal factors are in place.
Two transactions this year are already valued in excess of US$1 billion. At the top of the list, Dutch chip equipment giant ASML announced in September that it would lead a US$2 billion investment in French startup Mistral AI, in a deal seen as a combined European effort to challenge the dominance of the US tech giants.
Meanwhile, the British AI infrastructure business Nscale announced in September that it had raised US$1.1 billion of funding in a round led by the Norwegian industrial investment company Aker. In October, Nscale agreed a deal worth up to US$14 billion with Microsoft to help the startup build out infrastructure in Europe and the US, readying it for an IPO as soon as new year.
Elsewhere, the third largest deal of the year so far came in at just under US$1 billion. In July, US technology company NiCE acquired German conversational and agentic AI enterprise Cognigy for US$955 million.
M&A drivers in focus
The scale of such deals reflects the pressure on many organizations to move ever more quickly, with a recent EY survey reporting: “Among the 95 percent of senior leaders who report that their organizations are currently investing in AI, the number of companies investing US$10 million or more in the technology is set to nearly double next year to 30 percent, up from 16 percent currently investing at that level.”
For AI technology developers, the need to acquire new talent, accelerate R&D and win a share of generous state subsidies and partnerships for AI leaders is driving a frenzied pace of M&A and investment. For other businesses, the fear of missing out on AI tools that could give rivals a competitive advantage is also a critical driver for M&A activity.
In addition, PE firms and venture capital investors are also becoming significant players, racing to identify startups with the potential to capitalize on the AI boom, as well as to secure exposure to larger and scale-up businesses.
Talent show
The intense competition for talent in the AI arena has fueled a string of “acqui-hires” this year and last, with big tech companies swooping on smaller ones to buy out their top talent and intellectual property. Google owner Alphabet, for example, paid around US$2.4 billion to acquire the senior management team and licensing rights of AI coding startup Windsurf, and Microsoft made a similar move with its US$650 million deal at Inflection AI.
In fact, talent is one area where Europe has an advantage, making it fruitful hunting grounds for dealmakers. One recent study found that Europe has a per-capita concentration of AI experts that surpasses that of the US by 30 percent. Tech clusters across Europe include London, Berlin and Amsterdam, with world-renowned universities such as Oxford, Cambridge, ETH Zurich and France’s Inria providing a steady stream of new recruits.
Government backing
Government support will also play a critical role in driving AI dealmaking, with companies eager to take advantage of policymakers’ efforts to galvanize their own countries’ technology sectors. In the US, the Trump administration announced US$500 billion of such assistance, as part of a broad “America’s AI Action Plan.”
In Europe, the European Commission’s InvestAI aims to support AI development with €200 billion (US$231 billion) of public and private funds to spur growth. Meanwhile, private companies have committed £14 billion (US$18 billion) for investments in data center infrastructure as part of the UK’s AI Opportunities Action Plan.
Challenges on the horizon
M&A activity in the AI field is not without challenges. Competition for deal targets is intense, and this has driven valuations sky high. PwC’s Global Top 100 Unicorns report, published in November, notes that AI companies have driven a 44 percent increase in the valuation of the Global Top 100 Unicorns.
This surge has meant that only those with the deepest pockets—namely, the US tech giants—can afford the most innovative AI startups. And their purchasing power is enormous, with Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia acquiring dozens of companies between them.
The wave of money pouring into the technology sector has prompted fears about a bubble in the industry. On the listed market, such worries wiped US$800 billion off the value of US technology stocks over just five days at the beginning of November.
Against that backdrop, bidders fear overpaying for AI assets or, worse, shelling out for a much-hyped business that fails to deliver. Memories of the dot-com boom 25 years ago naturally loom large for many, and picking the winning technology or toolset in a market as rapidly evolving as the AI sector is challenging.
Deal complexity is another concern. The technical nature of AI assets, and the nuances of the broader market, require deal terms that are tailored, forward looking and jurisdiction specific. Cross-border transactions may be particularly challenging in this regard.
Indeed, in Europe, one additional challenge is the growing weight of AI regulation. While the Trump administration has taken a more lenient approach to regulating the evolution of AI, dealmakers in Europe must be conscious of the bloc’s more interventionist approach. The new EU AI Act, for example, imposes tough new restrictions on general-purpose AI models and systems deemed to be high risk.
The future is here
The prospects for further growth in AI dealmaking look positive. With both public and private companies desperate to acquire AI capabilities to enhance their products and services for competitive advantage, the fundamental demand drivers for M&A are set to strengthen.
Moreover, widespread recognition of the strategic imperative for AI investment is only one piece of the jigsaw. There is a growing focus on the need to build out AI infrastructure such as data centers and hardware, supporting M&A activity in this area of the market. AI-native startups continue to emerge at pace and represent attractive targets for larger businesses looking for ways to onboard the technology. The appetite of PE and venture capital investors is also growing, particularly with increasing signs of a recovery in the PE sector that could unlock liquidity.
Given the size and scale of its technology sector, the US appears likely to continue to dominate AI-driven M&A, particularly for larger and later-stage deals. But activity in Europe is also on the increase, and its impressive AI talent should feed an ecosystem of startups and early-stage AI ventures that will make attractive targets.
Despite the noted challenges, there should be plenty more AI-related dealmaking in 2026 and beyond, particularly amid predictions of a broader pick-up in M&A activity next year.