Quick Take
- AI deal values jumped 127% in H1 2025 despite 20% volume decline as investors pay premiums for talent
- US captures 83% of global AI transaction value with 47% of deal volume
- Software & Services dominates representing 68% of AI transaction value
- AI investments now account for 51% of VC deal value, up from 12% in 2017
- Private equity focuses on data infrastructure with 52% increase in data center deals
Artificial intelligence investments are bucking economic headwinds with remarkable value growth, new market data shows, as investors choose quality over quantity in today’s selective funding landscape.
Deal volume involving AI targets fell 20% in H1 2025 compared to last year, but deal values surged an impressive 127%. The shift shows investors are willing to pay big premiums for promising startups and AI talent as they gear up for the next innovation wave.
Total private capital fundraising for AI dropped 40% year-over-year. Yet an unprecedented share of capital raised during H1 2025 targets AI investments specifically. This focused approach shows investor confidence in artificial intelligence’s future despite current market uncertainty.
US Leads Global AI Investment Race
The United States keeps its grip on the global AI deal market with dominant market share. During H1 2025, the US handled 47% of deal volume across mergers, acquisitions, private equity, and venture capital while grabbing 83% of total transaction value.
America’s strength comes from its established startup ecosystem and available resources for innovation requiring major capital. The country’s seasoned venture capital scene keeps drawing global investors hunting for AI opportunities, building a cycle that feeds on itself.
The United Kingdom holds second place in transaction volume at 8%, gaining importance thanks to its developed VC ecosystem and many AI startups. China takes third by deal volume at 4% and value at 2%, backed by over 4,500 AI startups nationwide.
Software Sector Draws Most Investment
The Software & Services segment led AI deal activity, capturing 54% of volume and 68% of value across all transaction types. Healthcare & Life Sciences ranked second by volume but fourth by value because deals in this sector tend to be smaller.
Venture capital deal count for AI rounds will likely finish 12% down year-over-year. But this drop mainly reflects broader VC market slowdowns rather than less interest in artificial intelligence tech. Venture dollars going into AI are set to beat all previous years.
AI-related investments made up 51% of VC deal value in H1 2025, compared to just 12% in 2017. This major eight-year change shows artificial intelligence’s growing control over investment portfolios in the tech sector.
Infrastructure Investment Takes Center Stage
Private equity firms are putting more focus on digital infrastructure that supports large-scale AI rollout. PE deal value involving data center targets more than doubled in 2024 with a 52% jump, keeping strong momentum through 2025.
For PE investors, AI infrastructure offers a safer way to profit from AI growth. As one industry expert noted, it’s like selling shovels to gold prospectors – everyone needs the basic setup to deploy AI solutions effectively.
Private equity firms have shown clear selectivity, choosing mature companies with proven track records and solid financials. Rather than risky startup bets, they’re putting money into data infrastructure investments that support the wider AI buildout.
Strategic M&A Picks Up Speed
Strategic mergers and acquisitions involving AI targets are on track to beat last year’s numbers by 33% in volume and 123% in value. Big Tech companies are aggressively buying talent from fast-growing AI startups while spending heavily on AI-related infrastructure.
Businesses are speeding up AI company acquisitions to stay competitive as technology changes rapidly. Legacy companies see that AI integration has become vital for survival in increasingly disrupted markets.
According to PwC’s 2024 Global CEO Survey, 45% of CEOs believe their businesses won’t survive 10 years without transformation, with AI cited as a key driver of necessary change.
Market Outlook and Business Impact
The next six to 12 months will be crucial for business leaders repositioning their companies for AI-driven innovation. Short adaptation timelines are expected to drive capability-focused deals where large companies buy smaller targets to expand product offerings and add key AI talent.
Companies ready to adapt and innovate in this changing landscape are set to thrive as artificial intelligence keeps driving major changes in global markets. Nations are competing for tech leadership as governments direct subsidies, grants, and incentives to innovation centers like Silicon Valley and Beijing.
The current investment trend points to a maturing AI market where quality trumps quantity, with smart investors backing fewer but more promising ventures at premium prices.
