Victor Basta, Managing Partner at Artis Partners, joined S&P Global Market Intelligence’s expert panel to discuss how AI is reshaping the strategic M&A landscape. The session explored recent deal activity, shifting valuation dynamics, and how the evolving AI ecosystem is influencing acquisition strategies.
Below are high-level takeaways from the discussion, focused on trends relevant to growth-stage companies, investors and acquirers.
AI-driven M&A stands out in a subdued market
While overall tech M&A activity remains well below historical averages, deals where strategic buyers can acquire embedded AI capability within existing growth company targets is a very strong driver of deals into 2025. Facing rapid AI adoption, strategic acquirers are drawn to acquire businesses already leveraging AI, particularly where they enhance productivity or improve defensibility. Examples range from acquisitions in fraud detection to cyber security, and nearly always involve targets with tens of millions of revenues that are leveraging AI, rather than pure native AI startups often too highly valued to be acquirable.
Infrastructure is a key focus in current AI M&A
The demand for AI compute is extraordinary at the moment with majors investing tens of billions of dollars a year building out capacity to handle LLM requirements. As a result, acquisitions are accelerating in the ‘infrastructure layer’ including data centers, semiconductors, and dev-ops tools to support model deployment. This also extends to key enabling technologies within AI, such as Nvidia’s recent purchase of synthetic data expert Gretel.
Valuation multiples hinge on credible AI integration
Growth-stage companies seen as deeply AI-enabled are receiving significantly higher valuations than peers. Buyers are currently applying valuation multiples up to two to four times greater for AI-embedded growth companies, based on the perceived depth of AI integration and related team capability, though in some cases a target having “enough AI” remain subjective.
Adoption is high, but results vary
Generative AI is being adopted at roughly twice the rate of previous major innovations, such as the PC or smartphone, with 40% of people reporting regular engagement with LLM tools. This deployment into enterprises, however, faces very inconsistent return on investment as large enterprises need to grapple with limited change management capability, internal skill gaps and underutilization or rejection of tools by staff.
Verticalization is shaping buyer appetite
AI tools built for specific sectors such as fraud prevention, HR tech or FinTech are seeing significantly greater M&A interest as buyers favor solutions built on trusted datasets and well-defined use cases, which help reduce risks and implementation friction.
Capital is flowing into AI at record levels
AI now accounts for over half of all venture funding, up from 15 percent just two years ago. This surge is drawing capital away from other much larger tech sectors such as fin-tech and B2B SaaS, which is triggering more M&A activity now as many of these companies find raising larger rounds much harder than two years ago.
For more details, see the full S&P Global webinar replay on M&A in AI markets here.
