As companies strengthen their artificial intelligence capabilities, the cybersecurity industry is poised for another record merger and acquisition (M&A) year. Momentum Cyber reported 117 deals in the third quarter of 2026, which represents an increase from 117 deals in the prior year. This increased activity is a reflection of a shift in security companies' purchasing strategies in order to keep up with rapid advances in artificial intelligence.
There is currently a strong demand for security solutions based on artificial intelligence and tools capable of protecting AI-powered systems, which is contributing to the current wave of acquisitions. Organizations are increasingly adopting agentic artificial intelligence, which can perform tasks with minimal human intervention. However, security has become an increasingly important concern as organizations adopt these systems.
Among the key areas of investment are identity and access management, nonhuman identity, data security, agentic security, runtime protection, and operational technology security. In 2025, there are estimated to be 404 cybersecurity mergers and acquisitions. This year's activity also set a record in terms of deal value, with companies spending approximately $97 billion on startup acquisitions.
It is expected that investment funding rounds will decrease slightly from last year's levels, but acquisitions have continued to gain momentum as established companies seek capabilities that would take a considerable amount of time to develop internally.
Artificial intelligence models have advanced dramatically and automated cyberattacks have increased the urgency of this issue. As a result of these developments, companies are reviewing their security requirements, creating opportunities for startups that are developing AI-based products. In order to expand their capabilities, large corporations are acquiring established startups in emerging security categories and investing in early-stage companies in emerging security categories.
AI-driven acquisitions have also become increasingly common among established technology companies. As of 2026, Palo Alto Networks acquired CyberArk for $25 billion, while other companies pursued specialized capabilities in identity security, data protection, and artificial intelligence infrastructures. These moves are a result of a wider effort to incorporate emerging technologies into existing security portfolios rather than solely relying on internal developments.
A growing segment of the market is also emerging outside of traditional cybersecurity vendors. Software providers are seeking ways of securing AI agents within business applications, while organizations managing operational technology need to safeguard the systems and connected devices controlled by increasingly autonomous software.
As concerns regarding the risks associated with artificial intelligence grow, cloud providers and advanced AI developers are emerging as potential buyers of security technologies. Although acquisitions have increased, Momentum Cyber's analysis indicates that venture capital and private equity firms are scrutinizing their funding decisions more carefully, making fewer deals but more substantial investments in selected companies.
Investors are assessing which technologies will remain relevant in a rapidly evolving market, attracting attention to startups with proven leadership and specialized capabilities. During the first three quarters of 2026, Momentum Cyber announced 40 AI security acquisitions, up from 10 transactions throughout 2025. These figures indicate the rapid growth of this segment.
AI is becoming increasingly integrated into a wider variety of cybersecurity products, making it increasingly difficult to distinguish between tools designed to protect AI systems from cyber threats and tools powered by AI. According to industry observers, hyperscale cloud providers and leading AI research companies will have a greater influence on acquisitions in the future.
Increasing reliance on secure AI infrastructure may make specialised security capabilities more valuable, further affecting the cybersecurity market's competition. In light of the continued transformation of cybersecurity by artificial intelligence, acquisitions are expected to remain a key strategy for companies seeking specialized knowledge and faster innovation.
As AI security, identity management, and automated threat protection become increasingly important to the security sector, it is expected that future investment decisions and competition will be influenced.