These days, it’s hard to overlook headlines such as Microsoft’s USD19.7 billion acquisition of Nuance Communications and Panasonic’s USD7.1 billion acquisition of Blue Yonder. Acquisition of Artificial Intelligence (AI) companies has become a global trend, with leading technology firms investing heavily to strengthen their AI capabilities.
Transforma Insights has investigated trends in AI acquisitions and has summarised the findings in a report, The State of AI Acquisitions 2021- 2023: Big Tech Leading the Charge, that includes 461 AI acquisition deals during the focus period of January 2021 to December 2023.
This blog begins by exploring the significant increase in AI acquisitions from 2021 to 2023, then analyses the leading market segments driving these acquisitions, and concludes with an in-depth discussion of the top five applications within the AI acquisition landscape.
A total of 461 AI acquisitions were recorded during the period 2021 to 2023 and among them, the year 2022 recorded the highest volume of acquisitions, with a total of 191 deals. This was closely followed by 2023, which recorded 187 acquisitions, while 2021 had 83. The distribution of these acquisitions was relatively uniform throughout the years, with each quarter experiencing only minor fluctuations in the number of deals compared to the preceding quarter. Following a notable surge in acquisition activity from 2021 to 2022, the volume of acquisitions stabilised through 2023, maintaining a consistent level of deal-making in the AI sector.
In terms of industry segments, the Information and Communication Technology (ICT) sector leads, commanding 27% of the total deal count for both buyers and targets. It is followed by the Professional Services sector (primarily comprising firms in consulting, legal, and advertising) with a 13% share. The Health and Social Care sector accounts for 11%, while Manufacturing, and Retail and Wholesale each represent 8% of the total number of deals.
Among the various applications targeted by acquiring companies, natural language processing (NLP) is the most prominent, accounting for 27% of the deals. NLP applications span chatbots and voice assistants, social media platforms, monitoring tools, grammar correction, and search engines.
Workflow Optimisation and Image Processing & Analysis are the next two significant areas of focus, representing 21% and 15% of the applications, respectively. Workflow Optimisation involves leveraging AI to identify patterns and automate repetitive, time-consuming tasks, with a total of 94 acquisitions recorded in this category. Image Processing & Analysis is predominantly leveraged in the Health and Social Care and Entertainment sectors. Healthcare companies employ this technology for medical imaging research, while gaming companies use it for creating realistic graphics and procedural content, such as social media avatars.
Personalised Marketing and Data Scrubbing also account for 13% and 11% of the applications. Personalised marketing leverages AI to enable businesses to segment customers based on their behaviours and preferences, facilitating targeted campaigns that effectively engage specific audience groups. Lastly, Data Scrubbing uses AI, specifically Large Language Models (LLMs), to accelerate the data cleaning process by identifying similarities and differences within datasets. This segment is applicable to various sectors, including IT, healthcare, and professional services.
The volume of AI acquisitions has experienced remarkable growth, led by the ICT sector. Natural Language Processing emerges as the most sought-after application. Following a surge in 2022, acquisition activity has stabilised, reflecting a consistent interest across various industries. As companies continue to leverage AI to enhance their capabilities, understanding these trends and applications will be crucial for stakeholders navigating the evolving market.
Our infographic highlights these and more changes
In the infographic below we highlight the changes outlined above, and many others featured in the report, and as discussed in the blog post Navigating the AI M&A landscape: US dominates global AI deals.
