By Jacob Sonenshine

Growing interest in artificial intelligence assets and ready credit are fueling a buying binge of tech companies.

Deals in the tech sector globally totaled $511 billion this year through the first two weeks of September, up 41% from a year ago, according to the London Stock Exchange Group. A laundry list of companies could be next to receive offers.

We wrote in May and then again in the summer to expect ongoing tech deals all year. With global M&A having totaled $2.83 trillion through the first half of September, deal value is on pace to hit $4 trillion this year. As long as tech deals comprise the same portion of total deals, the sector can see over $200 billion worth of additional deal value for the rest of 2025.

Driving the acquisitions are stable interest rates, with many central banks reducing rates, which makes financing a purchase more attractive. Meanwhile, the tech sector's earnings remain in growth mode, and many tech companies are looking for artificial intelligence assets to incorporate into their product portfolios to bolster their competitiveness.

Palo Alto Networks' agreed in late July to buy CyberArk Software for $25 billion in cash and stock. The market didn't love it the acquisition at first, but the deal crossed the finish line nonetheless. For Palo Alto, the acquisition instantly increases profits and improves its package of software offerings to the many companies investing in cybersecurity.

For CyberArk, the offer was a substantial premium to its market value before the deal. The stock is now up 30% from before the market sniffed out that the agreement was imminent, with CyberArk's market capitalization now at $24.99 billion.

Elsewhere, private-equity firms are beginning to snap up tech assets. There are many small AI companies that haven't proven that they can reach scale, so their stocks have taken hits. Tech-focused PE funds see this as an opportunity to buy small companies on the cheap. Private-equity firm Thoma Bravo agreed to buy Dayforce, which has seen its stock drop 18% in the past five years, for just over $12 billion. The August announcement sent Dayforce stock soaring.

This week, Wedbush Securities analyst Dan Ives highlighted in a note several other companies that could attract buyers in the current buying frenzy. They include SentinelOne, Telos, Qualys, Tenable, Tripadvisor and Lyft.

Another is C3 AI. The AI software company has seen its stock drop 84% over the last five years, and is now worth just $2.5 billion. Most of the drop came in the first couple of years of that window. Since 2022, its stock is up 70%, as its business has stabilized.

The way the story has unfolded recently "significantly increases the chances of C3 being an M&A target over the next 3-12 months with C3 gaining traction across the enterprise AI space by strengthening its partner ecosystem leading to increased growth and market share," Ives writes.

Buyers could be larger software companies that could combine their existing products with C3 AI's, or PE funds. Private equity often buys smaller names because it can't create revenue or cost synergies the way corporate buyers can to justify big purchase like Palo Alto's acquisition of CyberArk.

C3 can be "attractive to financial buyers as the company now has... hit its near-term financial targets while presenting a lower valuation compared to the rest of the software complex," Ives writes.

There's also Varonis Systems, $6.7 billion a security software provider. The stock has gained 53% over the past five years, underperforming the small cap Russell 2000's 61%.

Varonis shareholders may welcome a reprieve in the form of an offer, which could come from a corporate buyer. Many of the larger software and security companies in the U.S. have enough combined annual free cash flow and balance sheet cash to help them finance a purchase of Varonis, which is a viable asset. Ives says it has used AI to accurately and quickly identify threats to its customers' data.

Don't be afraid to own some of these names. Your shares could pop from a takeout offer.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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October 03, 2025 11:17 ET (15:17 GMT)

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