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Hello, sharks! Deals are happening again in the tech sector.
PwC, in a midyear outlook published on its site in June, saw US tech company transactions picking back up in the first quarter of 2024: Overall transaction value in the first five months of 2024 reached $535 billion—a near 30% increase from the $412 billion reached in the same period the previous year, the management consulting company reported.
One driver of the rebound, according to PwC, is that hot little two-letter technology: AI.
Some first-quarter, AI-inspired deals cited in the report:
- Chip giant Nvidia announced in April that it plans to acquire Run:ai, an Israeli-based startup that manages generative AI workloads.
- Cisco’s $28 billion acquisition of cybersecurity and analytics company Splunk, shared in March, “aims to combine AI with cybersecurity and cloud technologies,” according to PwC’s outlook.
- As AI enthusiasm sparks interest in custom-designed chips, electronic design automation and semiconductor design firm Synopsys, in January, revealed plans to add simulation provider Ansys.
- Cohesity, a company that in February released a conversational search assistant for enterprise data, announced a partnership that same month with data-management company Veritas.
“You’ve got investment in AI to be made. You look internally at your company and your skill sets and your priorities, and you can either make the decision to build out those capabilities or look externally and partner with somebody else,” Lori Bistis, deals partner for the PwC M&A advisory, told IT Brew.
According to PwC’s report, factors like strong corporate profits, stabilizing inflation, and rising corporate confidence have also contributed to 2024’s early M&A recovery.
PwC’s 27th Annual Global CEO Survey, released in January 2024, found that 64% of chief executives had not made a major acquisition in the last three years; 60% of respondents, however, say they plan to do so in the next three.
“We believe that these AI capabilities are going to be increasingly important. Investors have a lot of enthusiasm around AI. So, I think we’re going to see that as a continued driver,” Bistis said. Other analysts, to be sure, are less sanguine about AI’s potential.
Following Cisco’s March announcement of its deal with Splunk, Cisco Chief Executive Chuck Robbins spoke with the Wall Street Journal about its plans to use the acquisition to help customers design their security policies using English language prompts.
“Large companies with large datasets that use AI effectively are going to increase their competitive differentiation,” he told the WSJ.