He said even some traditional IT companies that have historically avoided mergers and acquisitions are now looking at deals to strengthen their AI capabilities.
“We are seeing M&A across the board, even from some of the legacy players that have typically shied away from M&A,” Chandrasekhar said.
M&A: Merger and acquisition
The push for acquisitions comes as enterprise artificial intelligence (AI) projects move beyond testing and into actual production. UBS’s discussions with chief technology officers, chief information officers and AI companies indicate that projects are becoming more complex as they scale, increasing the need for IT services firms to provide implementation and other support.
“AI projects for them have been in a pilot or experimentation phase so far, and they’re really ramping up to production now,” he said.
Potential M&A targets could include smaller AI-native startups, data-centers businesses and other technology capabilities. Chandrasekhar expects such investments to accelerate as IT companies prepare for the growing demand linked to AI.
However, UBS is not yet taking a broad-based bullish view on the IT sector. Higher oil prices, interest-rate concerns and geopolitical uncertainty are putting pressure on technology budgets, while legacy businesses continue to face pricing pressure and some companies are dealing with execution issues.
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The brokerage therefore remains selective, focusing on companies and segments where it sees stronger growth opportunities or greater resilience. “We still remain selective,” Chandrasekhar said, even as UBS sees early signs of improvement from AI-led demand.
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