TMT M&A Outlook for 2026

Introduction

TMT M&A is entering 2026 with powerful momentum. Global TMT deal values rose over 70% to $1.6 trillion in 2025, with technology accounting for 84% of deal volumes and 76% of deal values. The number of mega-deals exceeding $10 billion reached 60, the highest since 2021. Looking ahead, deal activity is expected to accelerate further, driven by the competition for AI capabilities, consolidation of profitable software businesses, media platform mergers, and record levels of PE dry powder (exceeding $2.5 trillion globally). For TMT investment bankers, the pipeline for 2026 is the strongest in several years, with activity expected across every TMT sub-sector and every product group (M&A advisory, ECM, DCM, and leveraged finance).

Five Themes Driving the TMT M&A Pipeline

AI infrastructure and power: The critical constraint for AI dealmaking has shifted from chip availability to power availability. AI infrastructure investment continues at unprecedented scale (hyperscaler capex projected at $660-690 billion in 2026), and M&A in energy and utilities has become directly linked to the AI buildout. Expect continued data center acquisitions, power infrastructure deals, and neocloud financing transactions. Software consolidation: Consolidation is accelerating in profitable software verticals where AI can enhance product differentiation and margins. PE sponsors are targeting companies with strong recurring revenue and operational improvement potential, while strategic acquirers seek AI capabilities and customer bases. Software take-privates will continue as public market dislocations create opportunity for PE firms to acquire undervalued assets. Cybersecurity platform integration: Both hyperscalers and pure-play security firms are building end-to-end defense platforms, particularly in identity, access management, and cloud workload protection. The Alphabet/Wiz and Palo Alto/CyberArk deals established the precedent for $20-30 billion+ cybersecurity transactions. Media and streaming consolidation: The Paramount/WBD combination confirms the streaming consolidation thesis, and additional transactions are expected as mid-tier platforms seek scale or exit. Sports rights, gaming content, and music catalogs remain high-value targets. Telecom portfolio separation: Telecom operators are accelerating portfolio separation by exiting non-core assets (fiber spin-offs, tower transactions, media divestitures) and focusing capital on scalable fiber, spectrum, and edge capabilities.

AI remains the single most important driver of TMT M&A. AI attracted 50% of total global tech investment in H1 2025, with funding levels approaching the full-year 2024 total. Gartner projects global AI spending to reach close to $1.5 trillion in 2025 and exceed $2 trillion in 2026. Almost half of strategic technology deal value for transactions above $500 million in 2025 came from AI-native companies or cited AI benefits.

The mid-market (transactions between $100 million and $1 billion) is also positioned for strong activity, with TMT mid-market deal value rising 15% year-over-year and volumes edging up 3% in 2025. Baker Tilly projects this uptick will strengthen further in 2026, driven by AI adoption, cybersecurity demand, easing interest rates, renewed PE activity, and increased CEO confidence. Mid-market software, cybersecurity, and IT services are expected to see the highest volume of transactions, while mega-deals will concentrate in AI infrastructure, media consolidation, and semiconductor strategic transactions.