Big tech firms target data infrastructure software companies to increase AI competitiveness
Artificial intelligence (AI) is driving a once-in-a-generation makeover in tech that’s forcing several of the largest social media platforms and software makers to buy companies that help AI-backed systems run smoothly. Worldwide, generative AI spending is expected to total $644 billion in 2025, an increase of 76.4% from 2024, according to a forecast by technology data provider Gartner.
“AI without data is like life without oxygen, it doesn’t exist,” said Brian Marshall, global co-head of software investment banking at Citi. “Because of that, data is having a zeitgeist moment right now driven by AI,” Marshall said. As a result, companies that manage and process the data used to build advanced AI models on cloud-based systems have become highly sought after targets for legacy tech companies like Meta, Salesforce, and ServiceNow in the scramble to stay competitive against the likes of OpenAI, Google and Anthropic.
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Enterprise data infrastructure and analytics companies like Confluent, Collibra, Sigma Computing, Matillion, Dataiku, Fivetran, Boomi, and Qlik, could become targets for legacy tech providers in the near term, investment bankers say. The companies, they say, may help businesses integrate, analyze, and store information better.
“Messy, siloed data has long undermined the attempts of enterprises to deliver on the transformative potential of analytics. Now, with the urgency to deploy effective AI, fixing it isn’t just essential — it’s existential,” Florian Douetteau, co-founder and CEO of Dataiku, said in a statement.
Several multibillion-dollar deals for data infrastructure companies have been struck or closed just in the last few weeks:
- Meta announced Friday a $14.8 billion deal for a 49% stake in data-labeling company Scale AI.
- Salesforce announced plans last month to buy data integration company Informatica for $8 billion. It will enable Salesforce to better analyze and assimilate scattered data from across its internal and external systems before feeding it into its in-house AI system, Einstein AI, executives said at the time.
- IT management provider ServiceNow said in May it was buying data catalogue platform Data.world, which will allow ServiceNow to better understand the business context behind data, executives said when it was announced.
- IBM announced it was acquiring data management provider DataStax in February to manage and process unstructured data before feeding it to its AI platform.
Those deals highlight the strategic importance for legacy software players to own all aspects of data management, and M&A is often the fastest way to achieve it. Instead of building complex data systems from scratch, they are acquiring specialists that can help organize, clean, and connect data from across their business.
Would-be targets have sometimes become the hunters as was the case when Databricks, a leader in data processing and AI that was recently valued at $62 billion, announced plans last week to buy serverless database manager Neon for $1 billion.
“A lot of companies have a huge amount of data, but I think they’re learning that you can’t just funnel every piece of data you have into an AI engine with no organization, and hope that it spits out the right answer,” said Brian Mangino, partner at Latham & Watkins.
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