Cloud Giants and Chipmakers Accelerate AI Deals as Nvidia Beats Expectations

Artificial Intelligence (AI) has ramped up intensity within the technological industry. The race to dominate has intensified with cloud giants and semiconductor firms accelerating acquisitions to secure a competitive advantage. 

Microsoft’s AI acquisitions to strengthen their Azure AI, Amazon Web Services’ investments into AI chip farms, Google’s $32 billion Wiz Acquisition and Intel’s acquisition of AI hardware startups all illustrate the urgency.

Nvidia’s latest earnings have cemented its position as the world’s largest company by market value, momentarily surpassing $5 trillion in value. They reported quarterly revenue of $57.01 billion, surpassing expectations of $55.2 billion with a 62% increase in revenue over the past 12 months. This earnings beat may reassure investors that AI demand is genuine, calming fears. This milestone highlights the scale of Artificial Intelligence and sets the benchmark for rivals to pursue acquisitions to catch up to Nvidia’s dominance. 

The cloud infrastructure industry is dominated by Amazon Web Services (29% market share), Microsoft Azure (20%), and Google Cloud (13%). Competition is so strong that the UK antitrust regulator has found Microsoft’s licensing terms to drive up costs for its rivals. The Competition and Markets Authority also suggests that Amazon Web Services and Microsoft’s Azure each command up to 40% of the UK’s customer spending in the cloud infrastructure market. This intense rivalry and competition strategies explain why deal activity has surged, with acquisitions and partnerships being one of the fastest ways to secure differentiation in AI services.

Google’s $32billion purchase of cybersecurity firm Wiz is the largest software deal of 2025, strengthening Google Cloud against Microsoft Azure, Amazon’s AWS and Oracle. This all-cash deal will improve their security and prevent any potential breaches. Amazon’s $38 billion partnership with OpenAI boosts AWS against competition. This partnership allows OpenAI to run on AWS’s cloud infrastructure. Furthermore, Intel’s hardware consolidation to regain competitiveness within data-centre markets and Microsoft’s agreement to a further $250 billion of cloud services with OpenAI signal the pressure of these companies to compete and not fall behind rivals. 

There are several market drivers that underpin the reasoning for this wave of deals. Cloud competition, as previously mentioned, is a big force driving the need for investment in deals to keep up with this global trend. Exploding AI demand requires large levels of specialised chips and software, due to these enterprises deploying large language models. Furthermore, investor confidence has been rising amongst the AI industry, as seen with Nvidia becoming the largest company in the world and beating expectations. 

Despite optimism, risks have been a growing concern. AI bubble fears persist, with the Financial Times warning that corporate demand could slow if adoption lags. According to the graph, Google web searches worldwide for “AI bubble” have risen sharply in November. Some analysts compare current valuations to those of the Dot-com era, raising questions about whether AI will follow suit. Jeff Bezos has other thoughts, countering that it is a “good bubble” as it will leave behind useful infrastructure. Big technological leaders will need to keep adapting, without falling into danger. 

Crucially, the scale of these megadeals raises questions. Deloitte Insights suggests there is a mismatch between huge levels of spending in the semiconductor industry and these companies being able to monetise their Generative AI offerings. Whilst, acquisitions are intended to secure long term growth, they also carry the risk of overvaluation and uncertain returns.

Deloitte’s 2025 M&A Generative AI Study suggests many technological leaders are prioritising risk management before scaling rapidly. This is important as absorbing startups, such as the Wiz acquisition, may have integration risks, e.g. cultural fit issues. A combination of this and overvaluation due to the hype in Artificial Intelligence shows risks that may appear in acquiring firms.

Overall, Nvidia’s dominance over the past few months has triggered a wave of deal activity. Cloud giants and chipmakers are accelerating acquisitions, from Google’s Wiz deal to AWS’s OpenAI partnership, in the hope of narrowing the gap. However, the risks of integration, overvaluation and the talks of an “AI Bubble” may affect future M&A deals within this industry. 

For now, bubble fears may be of conversation, but the race is far from over. According to Deloitte insights, the semiconductor industry is projected to reach $1 trillion by 2030, up from an estimated $697 billion in 2025. This long-term growth projection shows positive signs for the future and suggests that deal activity may remain strong as these tech giants position themselves for expansion. The next year will make it clear whether these acquisitions generate lasting productivity improvements or simply push valuations higher.