Mergers and acquisitions (M&A) continue to offer a boost to the technology sector, particularly among small and mid-cap companies, according to an outlook by asset manager Fidelity International.
Hyun Ho Sohn, portfolio manager at Fidelity International, noted that technology continues to lead all sectors globally in M&A activity, driven by companies seeking to keep pace with innovation and maintain competitive advantage. He highlighted that small and mid-cap technology companies are especially active in this space, often becoming acquisition targets due to their strong intellectual property, specialised talent, and influence within the broader tech ecosystem.
According to Fidelity, the definition of small and mid-cap in tech has expanded significantly over the past decade. Many of these firms are now leaders in their respective niches, playing a critical role in areas such as software, semiconductors and digital infrastructure.
The firm cited several “high-profile transactions” that reflect ongoing consolidation in the sector. These include Microsoft’s acquisitions of LinkedIn in 2016 and Activision Blizzard in 2023, Nvidia’s acquisition of Mellanox Technologies in 2019, and Cisco’s purchase of cybersecurity company Splunk in 2023–2024. Sohn described such deals as examples of how large firms are strengthening their technology stacks by acquiring specialised capabilities.
Technology and competition top concerns for asset managers
Despite a market environment shaped by geopolitical risks and regulatory uncertainty, M&A activity has remained resilient in 2025. Fidelity reported that strategic acquisitions have been observed across industries including food delivery, semiconductors and enterprise software.
In the food delivery space, JustEat Takeaway and Deliveroo were acquired by Prosus and DoorDash, respectively. These deals enable both acquirers to expand their geographic reach and enhance their scale in competitive markets.
“On the semiconductor front, companies are looking to make strategic IP acquisitions. For example, US chip-maker Qualcomm acquired UK-based Alphawave. Alphawave is a leader in high-speed connectivity IP, which is predominantly utilised in connectivity solutions for data servers and storage. Qualcomm intends to diversify its operations beyond smartphone chips and into AI data centres and plans to leverage Alphawave’s high-speed IP in its business diversification strategy,” shared the portfolio manager.
Fidelity also highlighted Salesforce’s acquisition of Informatica as part of a broader strategy to expand its data cloud capabilities. Informatica’s tools for data integration and analytics are expected to support Salesforce’s growing focus on artificial intelligence and enterprise data solutions.
Sohn said M&A activity is likely to remain an important feature of the technology sector over the long term. While not a core driver of investment decisions, he believes it can serve as a potential source of additional returns, particularly in the small and mid-cap space. The asset manager continues to emphasise fundamentals in its approach to identifying companies with long-term growth potential that may also benefit from consolidation trends.
