Technology

The first half of 2025 has continued the technology sector’s momentum from late 2024, with deal activity remaining steady in the face of macroeconomic volatility. While shifts in trade policy introduced uncertainty across the broader macro landscape, tech M&A activity remained resilient, particularly in AI infrastructure, cybersecurity and vertical software. Although overall deal volume has stayed flat year over year from 2024, total deal value and the number of megadeals has increased. At the same time, the IPO market has shown moderate signs of life, with high profile names filing and a handful of new public offerings.

The following developments have shaped where capital has flowed, how transactions have been prioritized and the approaches dealmakers have taken to navigate a shifting market environment in 2025:

• AI remains a dominant deal catalyst in 2025, in part driving the high first quarter 2025 tech deal value ($64 billion), which has outpaced every quarter since early 2024. Activity has been fueled by both incumbents and hyperscalers acquiring AI startups and platforms to deepen capabilities in data orchestration, developer tooling and model optimization. Vertical consolidation continues to shape strategy, as companies seek to own more of the AI stack –– from chip to cloud to application –– while cross-sector convergence is blurring the lines between infrastructure, software and services. Notable deals include IBM’s acquisition of Hakkoda, OpenAI’s purchases of Windsurf and io, and CoreWeave’s continued roll-up of infrastructure assets to expand its generative AI footprint.
• Anti-competitive pressure continues to increase, with intensifying scrutiny around large-scale tech consolidation and market dominance. The Department of Justice (DOJ) continues to investigate Google in several cases, focusing on its dominance in search and advertising markets. Meanwhile, the Federal Trade Commission (FTC) initiated a landmark antitrust trial against Meta Platforms, setting a new precedent in post-merger intervention. Finally, Apple continues to deal with the ramifications of the Epic Games lawsuit.
• IPO activity picked up in early 2025, with a handful of successful offerings –– notably CoreWeave’s and eToro’s $4 billion-plus debuts, along with Chime’s public filing –– generating optimism in a volatile market landscape. Still, public market entry remains highly selective, as ongoing trade policy shifts and macro headwinds prompt many companies to delay filings. Potential filers like StubHub, Klarna and Medline continue to wait for more favorable pricing and volatility conditions. Clarity around fed policies for the second half of 2025, and the administration’s stance on tariffs and regulatory changes, will be important factors for market confidence and the potential for further IPOs in 2025.
• Cybersecurity and developer tools have emerged as M&A hotspots, reflecting sustained demand for cloud resilience, data governance and enterprise-wide threat detection. Simultaneously, legacy non-tech buyers are looking to add cybersecurity solutions to either drive efficiency in internal processes or enhance external offerings to customers by limiting threats. Notable transactions include Google’s pending $32 billion acquisition of Wiz, Validity’s purchase of Litmus and Palo Alto Networks’ acquisition of Protect AI. These deals highlight growing convergence across cloud security, endpoint protection, developer ecosystems and AI-enabled cybersecurity threat detection.

Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.

Despite policy and market uncertainty, tech dealmakers are staying active — especially in AI infrastructure, cybersecurity and vertical software — with more megadeals likely as leaders rethink their AI strategy.

While valuations have come down from prior peaks due to overall market disruption, buyer and seller expectations are beginning to align, setting the stage for more private equity (PE) activity fueled by the tailwinds of business reinvention and technological disruption. AI consolidation is accelerating, with strategic buyers racing to acquire infrastructure, tooling, proprietary models, engineering teams and inference capacity. As AI applications evolve, business leaders will likely need to build or buy tools to support an AI-led product strategy. Expect a wave of smaller, technology tuck-in deals as companies work to maintain or enhance market share. Rising demand for compute and the application of trained AI models is also driving interest in companies addressing data center and energy bottlenecks.

For capital markets, the IPO window will likely stay challenging through the third quarter, but we anticipate more public market testing by year-end — especially from profitable SaaS and infrastructure players with strong AI narratives. Late-stage private companies are using the time to boost IPO readiness, focusing on efficiency, governance and investor alignment. PE firms holding onto portfolio companies amid valuation gaps may move toward IPOs if rates ease and valuations climb. And with companies staying private longer, secondary deals will stay in play as investors seek liquidity and manage exit timing.

As the second half of 2025 unfolds, dealmakers who bring a clear strategic lens –– and the ability to move with conviction –– are better positioned to succeed. Current market volatility and lower valuations may end up driving higher returns for the dealmakers who can find value in the current market.
 

The technology sector entered 2025 with renewed momentum. AI remains the driving force behind much of the activity, and software, infrastructure and cybersecurity are top priorities for buyers. While capital markets are still uneven, alignment between buyers and sellers is improving, and select IPO activity is resurfacing. Ample capital, a shifting regulatory backdrop and a reduction in market volatility could support increased transaction volume in the months ahead –– particularly for companies with defined plans for growth and technological differentiation.

Explore national M&A trends