AI in Vertical Software Q1 2026 (Houlihan Lokey, March 2026): US AI venture deal value doubled to $222B in 2025

Houlihan Lokey's technology group argues that vertical software, not horizontal tools, will capture the outsized value from AI because of domain-specific workflows, proprietary datasets and system-of-record positions. The report cites $222B of US AI and machine learning venture deal value in 2025, up 105% year over year, and a 22% rise in AI mentions on S&P 500 earnings calls. It walks through how embedded AI shifts monetization from per-seat pricing toward premium modules, usage and outcome-based fees, and how acquirers now diligence retention, proprietary data advantage and evidence of customer ROI. On M&A, North American tech deal value has rebounded to 2021 levels on larger average deal sizes, strategics outspent sponsors with about $551B of global tech M&A in 2025, and private equity holds record dry powder. Sector deep dives cover construction technology, PropTech, hospitality, field service, transportation and supply chain software. For founders building vertical AI, it is a useful view of how bankers and buyers are framing moats and valuations right now.