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Transaction activity is no longer driven solely by traditional software consolidation or scale economics. Strategic priorities now centre on securing compute capacity, proprietary data, reliable and clean energy supply, and sovereign control over critical infrastructure and capabilities.
Digital infrastructure, particularly data centres, is one of the most active and competitive segments of global M&A. Institutional capital, sovereign investors, infrastructure funds and hyperscalers continue to invest in platforms offering scalable development pipelines and, critically, access to power. Real estate funds are also actively seeking exposure to data centres.
The capital intensity of AI deployment is unprecedented – some describe this as the biggest deployment opportunity since the industrial revolution. Investment is required across data centres, semiconductor supply chains, fibre and subsea networks, grid infrastructure and advanced hardware manufacturing. This is unlocking both equity investment from diverse sources and creative debt funding structures.
A defining feature of the current cycle is sector convergence. As part of this:
- Telecommunications operators are reshaping portfolios around fibre, edge and high-capacity network assets capable of supporting AI-driven traffic growth.
- Technology companies are moving further into infrastructure ownership through minority investments, joint ventures and capacity partnerships.
- Infrastructure investors are expanding upstream into integrated platforms combining compute, connectivity and energy capability.
In the near term, major technology companies and infrastructure investors are prioritising organic build-out, joint ventures and long-term capacity arrangements. Over time, we expect this scale of capital deployment to result in further consolidation as platforms stabilise, the market sets valuations and competitive positions solidify.
Defence technology: Dual-use innovation and sovereign capability
AI and digital infrastructure are increasingly central to national security. Governments are prioritising investment in autonomous systems, cyber security, space-based infrastructure, advanced communications and AI-enabled decision systems. This is driving heightened M&A activity in defence technology and dual-use businesses.
Private capital participation in defence technology has grown meaningfully, particularly in jurisdictions seeking to expand domestic industrial bases. Investors are targeting companies developing secure communications, satellite systems, autonomous platforms and AI-enabled analytics with defence applications. Strategic buyers, meanwhile, are acquiring niche capabilities to strengthen supply chain resilience and vertical integration.
The blurring of commercial and defence applications is increasing transaction sensitivity. Businesses that previously operated primarily in commercial markets may now fall within defence or national security frameworks, affecting deal structuring, conditionality and transaction timelines.
Strategic priorities now centre on securing compute capacity, proprietary data, reliable and clean energy supply, and sovereign control over critical infrastructure and capabilities.
Recent deal activity
Recent transactions highlight the scale of capital flowing into AI-related infrastructure. Among the largest announced transactions was the US$40 billion acquisition of Aligned Data Centers.
Investment is also extending into adjacent ecosystems, including energy supply, grid technology, semiconductor manufacturing and specialised AI software. Increasingly, transactions reflect a systems-level approach, recognising the interdependence of compute, connectivity and power.
A complex and fragmenting global regulatory landscape
The regulatory environment has become more intricate and strategically important.
Governments are tightening foreign investment screening and expanding national security review regimes, particularly in relation to semiconductors, cloud infrastructure, AI platforms, telecommunications networks and defence technology. Export controls, sanctions regimes and restrictions on advanced chip and AI technology transfers are reshaping cross-border deal structuring and due diligence.
Regulatory frameworks governing data protection, AI safety, competition, sustainability and critical infrastructure are evolving rapidly and divergently across jurisdictions. This fragmentation increases execution risk, extends transaction timelines and can influence valuation and risk allocation. Buyers and sellers are increasingly focused on horizon scanning and allocating risk for potential regulatory change.
In defence and dual-use sectors, export licensing, classified information controls and government approvals are now central considerations. Even minority investments may trigger review where sensitive capabilities or data are involved.
Early regulatory analysis and transaction structuring are critical. Buyers and sellers are factoring clearance risk into pricing, conditionality and long-stop arrangements. They are also exploring alternative structures, such as joint ventures and non-control positions, to navigate restrictions.
Outlook
We anticipate sustained transaction activity across AI, digital infrastructure and defence technology, underpinned by structural demand and strategic imperatives.
Key forward-looking trends include:
- Continued infrastructure scale-up: Data centres, fibre networks, subsea cables and energy-adjacent assets will remain priority targets as AI deployment accelerates.
- Defence and dual-use growth: Increased sovereign investment and geopolitical tension are likely to support further consolidation and capital inflows into defence technology platforms.
- Partnership-driven structures: Joint ventures, co-investments and long-term commercial alliances will prevail given capital intensity, regulatory complexity and valuation gaps.
- Regulatory-led structuring: Transaction planning will increasingly revolve around foreign investment approvals, export controls and AI governance regimes.
- Strategic supply chain control: Acquirers will continue to seek vertical integration across semiconductors, compute, connectivity and energy to mitigate geopolitical risk.
- Power shaping development: Grid constraints will remain a gating factor for data centre growth, with access to clean, reliable power being the competitive moat.
The strategic importance of AI capability, digital infrastructure resilience and sovereign technological capacity will continue. AI is not only driving transaction activity within technology – it is reshaping global capital flows, redefining infrastructure investment and embedding national security considerations at the heart of M&A strategy.
While heavy emphasis will remain on data centres and AI, we also expect activity in towers and fibre in certain regions – particularly Europe, Africa and the Middle East – where telco non-core asset divestment and consolidation will dominate dealmaking.
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