AI, defence tech and digital infra: Transformative forces

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.