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Here are the deals the 'AI arms race' could drive in 2025, according to 4 bankers from Goldman Sachs, BofA, and Axom Partners

Dec 13, 2024 - businessinsider.com
The article discusses the anticipated rise in mergers and acquisitions (M&A) driven by macroeconomic factors like lower interest rates and a new administration, with a particular focus on AI-related deals. Investment bankers from firms like Goldman Sachs, Bank of America, and Axom Partners predict a surge in M&A activity involving data and infrastructure companies, which are essential for AI development. The emphasis is on companies that manage, move, and secure data, as well as those providing developer tools and resource optimization. This trend is expected to extend beyond the tech sector, impacting industries such as customer service, commerce, and industrials.

The article highlights the importance of data infrastructure and management as critical components for AI success, with companies like Databricks and Snowflake being key players. The need for scalability and cost efficiency in AI workflows is driving tech companies to acquire infrastructure firms, exemplified by Nvidia's acquisitions. Additionally, there is a focus on reducing inference costs, which could lead to further M&A activity. Cross-sector opportunities are also anticipated, particularly in the industrial space and customer relationship management, as companies seek to integrate AI into their operations.

Key takeaways:

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  • Macroeconomic factors, such as lower interest rates and a new administration, are expected to drive an increase in M&A activity, particularly in AI-related sectors.
  • Investment bankers are focusing on data and infrastructure companies as key players in the AI M&A wave, with an emphasis on data management, integrity, and security.
  • AI dealmaking is expanding beyond technology sectors, with potential growth in customer service, commerce, and industrials, driven by AI's integration into these areas.
  • The need for scalability and cost efficiency in AI workflows is prompting tech companies to acquire infrastructure players, with a focus on lowering inference costs and optimizing data flows.
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