The infrastructure behind AI requires more than code—it requires energy, semiconductors, and industrial-scale manufacturing. In 2025, expansion-stage deal value in these foundational sectors hit record highs as investors placed larger, higher-conviction bets on companies turning digital ambition into physical reality.

Deloitte’s latest Road to Next report examines how private capital is shifting and where opportunities lie. Expansion-stage deals across energy, semiconductors, commercial products, and transportation exceeded $44 billion—up 69% year over year. Energy deal value rose 57% to $19.5 billion, pivoting toward alternative energy and grid infrastructure, while follow-on investors accounted for 75% of commercial products deal value.

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Middle-market exits held up in the first quarter, but the vast majority came through one path. Exit value reached $32 billion across 218 transactions, up 14% year-over-year—a recovery, on the surface. Underneath the headline numbers, though, we see a market with limited optionality for middle-market GPs.

Sponsor-to-sponsor deals captured 69.5% of exit value as corporate buyers retreated to a pre-pandemic low of 30.5% and the IPO window stayed shut, extending a drought that began in 2022.

Corporates have not stopped buying altogether—they took 58.4% of exit value across all of US PE—but they are focused on larger targets, generating liquidity for the top end of the market while leaving the middle market searching for alternative exit paths.

The squeeze shows up in the hold-period data. Median holding time for US PE exits fell from 6.3 years to 5.1 at the industry level—the lowest since 2021—as the broader market made some progress in clearing its backlog. Isolate the middle market, however, and the figure barely moved, easing only from 6.4 to 6.1 years, a sign that middle-market assets are taking longer to find the door.

The bright spot has been the platform model, and it is becoming the middle market’s defining strategy. Add-ons made up 68.4% of middle-market deal count and 53.5% of value in Q1, consistent with the elevated levels seen over the past five years. That wave of dealmaking is now generating exits, as larger sponsors pay up for scaled, de-risked businesses. KSL Capital Partners’ exit of Southern Marinas to Stonepeak and Odyssey Investment Partners’ exit of Champions Group to Blackstone are two recent examples of the playbook in action.

The entry math provides the blueprint. The strategy works because smaller targets trade at a discount to larger ones: Median multiples in the $25 million to $100 million band closed 2025 near 8.8x EV/EBITDA, against 13.4x at the top of the middle market. A sponsor rolling smaller businesses into one scaled platform is effectively buying down its blended entry multiple and selling the assembled platform at a higher multiple—an “arbitrage” that holds even when broad multiple expansion has stalled.

But the strategy hinges on execution. Buying smaller, riskier assets and rolling them into one de-risked platform requires a disciplined operating plan: implementing shared infrastructure, professionalizing reporting, extracting procurement and pricing synergies, and scaling commercial organizations are a few of the levers a sponsor has to pull.

In a market that runs on sponsor demand for scale and can no longer lean on cheap debt, the edge belongs to GPs who can buy small, integrate well, and deliver the operational gains that justify the exit price.

Download the full Q1 2026 US PE Middle Market Report for a deeper look at the trends shaping the space.

Venture funding for robotics and physical AI set a record in the first quarter. Investors concentrated capital in companies that can manufacture at scale, win paying customers and cut the cost of deploying autonomous systems.

Robotics startups raised $16.3 billion across 492 deals in Q1 2026, according to our recently released Q1 2026 Robotics and Physical AI report, up 154% from the previous quarter and 256% from a year earlier. Rounds for Shield AI, Saronic and Neura Robotics added about $5 billion. Strip those out, and investment still reached a record $11.3 billion.

The stage mix points to a growing pool of public-market candidates. Late-stage and venture-growth investment each reached $5.9 billion, together 73% of quarterly deal value. Shield AI, Saronic, Apptronik and Zipline have for quite a while moved past R&D into production, backed by government or commercial contracts.

Software commanded the quarter’s richest pricing. Skild AI raised $1.4 billion at a $14 billion valuation. Physical Intelligence is reportedly seeking funding at more than $11 billion. Trailing 12-month investment in AI and autonomy platforms climbed 431% to $5.3 billion, as buyers paid up for software that lowers integration costs and lets robots work across multiple platforms and environments.

Industrial robotics drew $5.6 billion in the quarter, ahead of the $4.5 billion that went to defense and security robotics. Defense remains the largest segment on a trailing basis, at $11.9 billion, but industrial robotics has closed the gap to less than 10% and is growing faster, as investors back manufacturing, assembly and material-handling systems.

Exits are opening up. Robotics companies generated $6.2 billion in exit value, more than the previous five years combined, led by six public listings. The buyer pool now reaches past defense and industrial incumbents to Amazon, Mobileye, Symbotic and Bentley Systems, widening the paths to liquidity.

Record funding has tightened, not loosened, the market. Investors are drawing a sharper line between technical demonstrations and businesses with production capacity, recurring revenue and customers willing to deploy at scale. Download the report for the full quarterly breakdown of the sector.