Technology M&A: AI infrastructure and regulation redefine the deal cycle

Share this article Copy Link Share on X Share on Linkedin Share on Facebook Deals are ramping up in the tech space, driven by trends like AI, cybersecurity and connectivity. Credit: Adobe/Creative-Touch. A powerful rebound in tech dealmaking Despite a forbidding backdrop of geopolitical and regulatory uncertainty, technology M&A has hit the accelerator. In the third quarter of 2025, transactions in the tech, media and telecom (TMT) sector reached $256 billion, a 51% jump on the previous quarter. The scale of the rebound is significant in a market that only recently seemed stuck in neutral. The resurgence has been led by very large transactions. Deals worth $1 billion or more accounted for $220 billion of Q3 2025 value, spread across 37 mega-deals. The largest of these was the $55 billion takeover of Electronic Arts by a consortium including Saudi Arabia’s Public Investment Fund, Silver Lake and Affinity Partners, which alone absorbed more than a fifth of quarterly tech deal value. Buyers are once again prepared to commit serious capital. Yet, in an age of anxiety about asset bubbles and increasingly complex legal wrangling over deals in the tech space, this is far from a simple reversion to the freewheeling environment of the late 2010s. For investors, strategics and sponsors alike, the task is to deploy capital into the parts of the technology stack that are both structurally critical and likely to remain on the right side of evolving rules. AI infrastructure: owning the plumbing of the new economy Capital is clustering around the plumbing of the AI economy. Investment in AI infrastructure – data centers, semiconductor manufacturers and the companies that handle power, cooling and networking – was a dominant current in Q3 2025 deal flow. Buyers are racing to secure scarce capacity for AI workloads, from specialist chips to the high-bandwidth interconnects that move data between servers. Recent transactions underscore the intensity of this land grab. The $9 billion failed acquisition of data center operator Core Scientific by AI specialist CoreWeave is a clear statement of intent: owning the physical layer of AI capacity is becoming as strategic as owning software platforms. Nvidia’s $5 billion investment in Intel to co-develop AI infrastructure and PC platforms signals a similar focus on hard assets that can underpin the next wave of AI deployment, rather than purely betting on application-layer winners. Surveying the M&A landscape, it is evident that fervor around AI is far from abating. For dealmakers, the question is less whether to have exposure and more where along the infrastructure stack to place capital – and how to structure deals so that regulatory and execution risks remain manageable. Connectivity and cybersecurity as strategic battlegrounds Connectivity is another defining theme in tech M&A. Rising traffic from streaming, remote work and AI applications is forcing operators to fortify 5G networks, extend fiber and explore the potential of satellite-based connectivity. The next generation of applications – from AI-driven consumer services to industrial automation – depends on resilient, high-capacity networks. That reality is being priced into deals. Transactions such as EchoStar’s $23 billion sale of spectrum licenses to AT&T, followed by a $20 billion agreement to sell additional spectrum to SpaceX, are putting all-new strategic assets at the heart of the US wireless and satellite broadband landscape. These spectrum packages are not simply regulatory artefacts; they are the scarce raw material that will determine who controls the future flow of data. Flashy new apps and large language models may dominate headlines, but the market’s smart money is increasingly pumping into control of the networks that underpin them. Owning spectrum, backhaul, data routes and last-mile connectivity is becoming a decisive competitive advantage – and a fertile hunting ground for corporate and financial acquirers. Cybersecurity is the third headline theme in technology M&A. Vendors focused on cloud security, identity management and threat detection continue to attract strong interest as an increasingly digitized world produces ever more attack surfaces and threat vectors.

Palo Alto Networks’ $25 billion agreement to buy identity security specialist CyberArk reflects the premium investors are willing to pay for assets that can address board-level concerns around resilience, compliance and operational continuity. For investors and corporate strategists, these deals show that security is no longer an add-on; it is integral to the value of digital platforms and infrastructure. Acquisitions in this space are as much about safeguarding future cash flows as about near-term revenue synergies. Diverging regional dynamics Geographically, the US has become a tech M&A behemoth. In Q3 2025 there were 925 deals involving US targets, with an announced value of $190 billion – a 51% increase compared with a year earlier. North America now dominates global tech M&A by value, supported by deep capital markets, a dense ecosystem of growth companies and a large domestic customer base that enables buyers to scale acquisitions quickly. Elsewhere, the picture is more uneven. Europe recorded just $20 billion of TMT deal value in Q3 2025, a 64% year-on-year decline. Uncertainty abounds across the bloc amid ongoing antitrust probes into large platforms, while the recently enacted Digital Markets Act brings even small, early-stage targets onto regulators’ radar. The compliance burden is rising not only for the global giants the law targets, but also for venture-backed and mid-market technology companies in their orbit. Parallel reforms are under way in the UK, where new filing triggers extend the Competition and Markets Authority’s reach to firms with significant market share even when deal values are modest. The result is a more complex approval environment that can weigh on timelines and may discourage some cross-border suitors, particularly where the strategic rationale is exploratory rather than decisive. By contrast, the backdrop is brighter across the Middle East and Africa. Dealmaking activity in the region hit $30 billion in Q3 2025, surging more than sixfold year on year – albeit from a lower base. Sovereign wealth funds are stepping up as significant backers of data centers, communications networks and AI infrastructure as part of broader efforts to diversify away from reliance on hydrocarbons. This wave of capital is giving emerging markets a bigger stake in the onward march of global digitalization.

While North America remains dominant in absolute terms, the build-out of infrastructure in the Middle East and Africa suggests that future technology deal cycles will be more geographically distributed, with new hubs for compute and connectivity rising alongside traditional centers. From mega-deals to minority stakes These are exciting, though unstable, times for technology dealmaking. The very factors driving growth – rapid innovation, intense competition and shifting regulation – also introduce fragility into valuations and business models. Many financial investors are therefore leaning into minority stakes that offer exposure to hot areas such as quantum computing, advanced robotics and foundational AI models without automatically triggering merger-control thresholds. This approach allows sponsors to participate in upside while keeping options open as technologies mature and regulatory frameworks settle. Minority positions, structured equity and joint ventures are all becoming more common tools in the dealmaker’s kit, especially in frontier segments where outright control would invite scrutiny or lock capital into unproven platforms. Despite the prominence of large-scale, headline-grabbing transactions in the most recent quarter, smaller deals play an important complementary role. They enable investors to build optionality, secure partnerships and assemble ecosystems of capabilities that can later be deepened through follow-on acquisitions when conditions, valuations or rules are more favorable. Foundations first: where the next wave of value will accrue Looking ahead, the numbers suggest that the focus on foundations rather than front-end applications will persist. Hyperscale data centers, AI chips, power management systems, advanced cooling technologies and high-bandwidth interconnects are all likely to absorb a large share of future tech deal value. Without this backbone, ambitions in AI, automation and cloud-delivered services falter. The push to stake a claim in AI technologies is not yet abating. At the same time, smaller, capability-driven acquisitions and cross-border deals that plug undervalued European and Asian assets into North American platforms are also worth watching. These transactions can provide access to talent, IP and market presence at more attractive entry points, while leveraging the scale and capital of larger buyers. Over a longer horizon, investors still view the next generation of major technologies – artificial general intelligence, quantum computing and advanced robotics – as transformational fields worth serious capital. Yet with the market already hot, funding will increasingly follow clear proof of technical readiness, credible roadmaps to commercialization and stringent consideration of the costs of navigating regulation. For investors, M&A dealmakers and corporate strategists, the implication is clear. Tech M&A’s comeback looks assured, but careful and considered adaptation to a changing market will be critical. The winning strategies will combine a sharp focus on foundational infrastructure, a nuanced understanding of regulatory risk, and flexible transaction structures that allow portfolios and platforms to evolve as the technology and policy environment shifts. Discover further insights To learn more, download our report – The Future of Tech, 2025-2035: Insights for Investors & Dealmakers – published in association with Sterling Technology – the provider of premium virtual data room solutions for secure sharing of content and collaboration for the investment banking, private equity, corporate development, capital markets, and legal communities engaged in TMT M&A dealmaking and capital raising. Sign up for our regular news round-up! Give your business an edge with our leading Tech Monitor Sign up