For many corporate and private equity clients, the more common play in 2025 was to quietly buy focused AI capabilities and teams through modest acquisitions, work that generated plenty of diligence, data and intellectual property work for deal lawyers.
Data provided by PitchBook shows that deals under $300 million surged in 2025 and made up the lion's share of total AI-related transactions.
There were 1,518 AI deals totaling $156.1 billion that closed last year, of which 1,460 deals totaling $9.3 billion were valued at less than $300 million each, according to the data.
"Companies across all industries are looking into AI and technology deals that are smaller in pure dollar amounts but are strategically important for their future businesses," David Lam, co-chair of the mergers and acquisitions practice at Wachtell Lipton Rosen & Katz, told Law360.
Across industries, companies are looking for AI to improve efficiency and productivity, depending on the types of businesses, said Lam, whose clients have included OpenAI.
Insurance companies may use AI to assist in underwriting and risk evaluation, while pharmaceutical firms are employing the technology to assist with drug discovery, Lam noted.
He said some clients have set up venture arms to pursue dealmaking "to invest in early-stage companies that could help change or transform the business in which they are engaged."
The PitchBook data shows that AI-related M&A transactions with valuations under $300 million that closed in 2025 jumped nearly 50% over the prior year. The 1,460 transactions in 2025 were up from 991 in 2024 and 759 in 2023.
Deal value in that band stayed essentially flat, at about $9.3 billion in 2025 compared with about $9.5 billion the prior year.
Peter Jones, a partner in Sullivan & Cromwell LLP's M&A, technology, digital infrastructure and private equity groups, was not surprised the sub-$300 million band represented such a large share of AI dealmaking, describing an "AI arms race" that is pushing buyers to make small bets and move quickly on acquisitions that can provide a head start.
"There's a desire to hoover up and acquire AI talent, and the team is really the asset in a lot of the deals," said Jones, whose clients have included xAI and Tesla.
Jones said so-called acquihires remain a meaningful part of deal flow in this range, with buyers often purchasing a company largely to secure its engineers and speed up hiring, sometimes alongside a slice of intellectual property.
In many of those situations, he said, the acquirer's longer-term plan is not necessarily to keep the target's product running as is, but to absorb the team and either rebuild the offering on the buyer's platform or retire it altogether.
The transactions can serve multiple strategic purposes, including securing talent, shoring up missing capabilities and preventing competitors from landing a coveted team or technology.
"There is a focus to fill product gaps, but also to stop certain assets falling into the hands of competitors," he said.
He added that the uncertainty around which approaches will ultimately win out is nudging companies toward a portfolio mindset, noting that "it hasn't yet settled what dominant AI technology will be and exactly how useful it will be in different situations."
When it comes to who is driving the sub-$300 million activity, Jones said the buyer universe skews heavily toward the largest players, rather than smaller companies combining with peers.
Jones added that private equity-backed buyers can be part of the mix as well, particularly sponsors pursuing buy-and-build strategies who acquire bolt-on targets to add AI capabilities into portfolio companies.
Individual M&A transactions behind the figures show how established industry players have been dipping into this segment.
For instance, Boston Scientific's $277 million acquisition of Menlo Park, California, company Cortex closed in January 2025, reflecting how medical device makers are using targeted deals to add AI-driven diagnostics and monitoring capabilities.
Nvidia's $250 million purchase of OctoAI, a Seattle-based generative AI startup, closed in September 2024, underscoring that even a central beneficiary of the AI boom has been relying on smaller acquisitions.
Despite the surge in activity in 2025, Jones said there is still a steady stream of fresh startups and talent, including ventures formed by employees leaving major AI companies to strike out on their own.
"I'm anticipating that you will continue to see very strong deal flow, certainly over the next year," he said.
--Editing by Daniel King.
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