CIBC Tech & Innovation Market Update – March 2025

For the last three years, we’ve been hearing the same thing: AI is going to replace jobs. This statement has simultaneously stoked fear among employees worrying about job security and excitement among employers hoping to cut costs. However, nearly three years have passed since the popularization of genAI chatbots and the question remains, how will AI agents change the world?

The vendors of AI agents, such as OpenAI, Anthropic, Microsoft, ServiceNow, SAP and Salesforce, are expecting demand for AI agents to help drive growth in the years ahead. On its most recent earnings call, Microsoft stated that customers have collectively created more than 400k custom agents using CoPilot studio. Salesforce stated that the company already has 3,000 paying Agentforce customers. And OpenAI’s Sam Altman proclaimed in a blog post that “in 2025 we may see the first AI agents join the workforce, and materially change the output of companies”.

In 2024, private equity (PE) markets showed early signs of improvement. The technology sector was a bright spot, with private valuations and deal activity benefiting from strong performance in public equity markets. PE buyout EBITDA multiples recovered in 2024, while revenue multiples were stagnant, pointing to a focus on quality and increased confidence from buyers. Public-to-private transactions made up a significant portion of the largest deals, a trend we have observed in our own coverage with the pending acquisition of Converge by H.I.G Capital. Looking to 2025, exit liquidity may see relief from a pickup in IPOs in the second half of the year, supported by recent strength in tech stocks, a growing backlog of unicorns, and improved clarity on policy from the Trump administration.

The Artificial Intelligence Action Summit kicked off mid-February, with several world leaders and tech executives in attendance, including Canada’s Prime Minister Justin Trudeau. The conference was held in Paris and co-hosted by France and India. Attendees included leaders from dominant tech companies, including Sam Altman of OpenAI, Brad Smith of Microsoft and Sundar Pichai of Google, along with academic researchers and policymakers. The event is the third in a series of global AI summits. The event is timely, just weeks after DeepSeek shook up the industry. We summarize some of the main takeaways coming out of the conference.

In the wake of the January 27 market sell-off linked to DeepSeek news, U.S. tech earnings this quarter have prominently highlighted the accelerating adoption of AI, monetization strategies, and capital expenditures. Microsoft reported a remarkable $13B run rate for Azure AI and anticipates a surge in CoPilot+ PC sales. Apple expanded its AI capabilities, while Meta is gradually exploring monetization opportunities. Google is enhancing its ad performance through AI, and ServiceNow has introduced a consumption-based pricing model for its AI solutions. The introduction of DeepSeek’s R1 model has sparked interest among developers, with companies like Amazon and SAP expecting to benefit from reduced costs in AI infrastructure. Google’s higher spending forecast may not have been received well by investors, with their shares going down by 7.3% following their earning results.