There is a massive shift toward agentic infrastructure across the entire tech stack.

Anthropic's revenue and usage surged dramatically in Q1, putting them on pace to hit $30 billion for the year, with the number of large enterprise customers doubling. AMD also doubled its TAM forecast for the server chip market to $120 billion, driven by the growing demand for processing power as AI systems become more sophisticated and autonomous.

Enterprise adoption of agentic AI has clearly begun, catalyzed by the SaaS-pocalypse. This crisis forced an ecosystem-wide reset: Buyers are focusing on outcome-based SaaS models, vendors are retooling for agentic workflows, investors are reassessing economic moats, and sponsors are reevaluating incentives and strategic plans within portfolio companies.

To help investors navigate this transition and track $5.4 trillion in global enterprise IT and hyperscaler spending, we have developed a 209-node market map taxonomy. Spanning three decision trees, investment stack, TAM, and sector industry, every deployment node is defined with a comprehensive description and market leaders. This framework operates as a playbook to help strategy officers and portfolio managers identify infrastructure capital flows, M&A targets, and strategic partnerships.

Here are three ways you can use the taxonomy to navigate the new AI ecosystem:

1. Build strategic partnerships

High-fidelity intelligent digital labor requires highly efficient lower-level physical computing infrastructure. Investors can use the taxonomy to trace supply chain relationships from semiconductor suppliers to software orchestration workloads. This can help identify critical physical bottlenecks, like gigawatt-scale power, advanced liquid cooling, and next-gen GPU capacity, that gate operational milestones and go-to-market strategies.

2. Analyze competitive dynamics

Generative and agentic AI have challenged the value proposition of traditional software ecosystems. Within the enterprise, vendors delivering autonomous workflow replacements will command pricing power through three defining moats: outcome pricing, deep business logic, and proprietary data. Granular segmentation allows investors to identify which incumbents possess these attributes, which startups are disruptive, and which targets are accretive M&A candidates within each deployment end market.

3. Track capital flows

Capital flooding physical computing today will eventually drive widespread agentic adoption. As marginal intelligence costs approach zero, token consumption will expand exponentially as billions of agents automate workflows at limited additional cost. This will result in an explosion of innovation within the software layers, eventually driving the adoption of edge AI intelligent systems. Investors can track this sequence of capital flows. By monitoring where infrastructure spending peaks, investors can identify rotation opportunities higher up in the stack.

The current market turmoil in software is an opportunity to assess the entire AI ecosystem at its most granular level. The market will reward early investments and partnerships by those who use a taxonomy like this one to assess direct, indirect, and adjacent supplier, vendor, and competitive relationships. Market valuations will start to reward companies that outperform their stated agentic AI goals.

This taxonomy helps map this path forward, helping all stakeholders track progress. View the full map in our report The SaaS-Pocalypse Opportunity.

Aerospace and defense PE activity surged in Q1, with PitchBook estimating 143 deals totaling $11.3 billion, more than double the deal count from a year ago.

Defense led the way, posting 53 transactions, a 382% jump over Q1 2025, as rising US and European defense budgets and growing confidence in long-term government procurement pushed capital into the sector at a pace not seen before in PitchBook's dataset.

The war against Iran has validated two core PE investment theses. Defense electronics, covering electronic warfare, radar, guidance, and mission computing, proved decisive in the campaign. And the drawdown of PAC-3, THAAD, and SM-3 interceptor stockpiles created a durable replenishment cycle that sponsors can underwrite with confidence.

The fiscal year 2027 budget proposal, released April 3, included specific increases for missile defense, electronic warfare, and space-based ISR, giving investors the procurement visibility they had been waiting for. While actual deals take time to play out, this news only pours fuel onto some already-hot defense subcategories.

Exit activity kept pace with deal flow. Q1 2026 exit value reached an estimated $15.7 billion, the strongest quarter in PitchBook's dataset going back to 2017, driven by the York Space Systems IPO at $3.7 billion, the $2.2 billion sale of Precision Aviation Group to VSE Corp., and Shield AI's $2 billion acquisition of Aechelon Technology.

European defense is drawing attention in its own right. Germany's constitutional amendment unlocked an estimated $565 billion in new defense capacity, the UK committed to raising defense spending to 2.5% of GDP by 2027, and a five-way bidding contest for UK aerostructures maker Senior plc reflected how competitive the market for European assets has become.

PitchBook expects deal activity to remain strong through the rest of 2026, particularly in defense electronics, missile supply chain, and commercial aerospace parts, where fragmented markets and clear government demand signals continue to attract PE capital.

Read more in our Q1 Aerospace & Defense Report.