Data infrastructure driving hot tech M&A market in AI race

Weighed down by tariffs and geopolitical uncertainty, deal-making has slowed to a crawl across most industries except one: the unglamorous world of data infrastructure.

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The companies that process the data used to build advanced AI models have become highly sought after targets for legacy tech companies like Meta, Salesforce, and ServiceNow in the scramble to stay competitive against the likes of OpenAI, Google and Anthropic.

“AI without data is like life without oxygen, it doesn’t exist,” said Brian Marshall, global co-head of software investment banking at Citi. “Because of that, data is having a zeitgeist moment right now driven by AI,” Marshall said. Tech deals are one of the few bright spots in an otherwise gloomy M&A market, accounting for $421 billion of the $1.67 trillion in global deals announced in the first five months of the year, or about 25 per cent of total M&A, according to preliminary data by Dealogic.

That’s up from about 20 per cent last year and 17 per cent in 2023, the data shows. Of the tech deals, those involving AI software makers accounted for almost three quarters of the overall value.

Speed matters

Goldman Sachs Managing Director Matthew Lucas, who focuses on M&A relating to all aspects of computing, said enterprise data, as it applies to use in AI, is the “most dynamic area in software M&A right now”.

“There’s a very strong perception that speed matters a lot, getting there first matters a lot, and that tends to lend itself to doing M&A,” Lucas said.