“Are we expected to see a significant price increase in the global technology sector over the coming year?”
We spoke with Gidi Shalom Bendor, CEO and Founder of S Cube, part of the IBI Capital group and Israel’s leading technology valuation firm, who reflects on the past year and sets the stage for the year ahead. What’s expected to drive the AI sector? Which other sectors are likely to stand out? Why do Israeli companies prefer M&A deals over IPOs? And what is the outlook for the local technology sector’s performance?
S Cube conducts around 700 valuations annually, with the vast majority of its clients operating in the technology sector, primarily start-ups at various stages. In fact, the company carries out most of the technology sector valuations in Israel, giving it a broad perspective on the microcosm known as Israeli high-tech.
Looking back at 2025, the Israeli tech sector continued to feel the impact of the war and ongoing military operations. While there were signs of improvement compared to the previous year, it remained behind the performance of the global technology sector. Israeli companies showed a clear preference for M&A exits over IPOs. As we look toward 2026, AI, robotics, cybersecurity, quantum computing, and defense tech are expected to drive growth. The local market is likely to follow these trends, though performance may still trail international peers.
Despite last year’s concerns about an AI bubble and Trump’s tariffs threatening market stability, the Nasdaq shattered records in 2025 and is now roughly 60% higher than at the end of 2021, a level many viewed as a bubble. How do you see the global technology sector today?
First of all, this isn’t a bubble. Technology is creating real economic value, spreading into new industries, and driving productivity gains. With each expansion comes demand for further tech innovation, from cybersecurity to large scale infrastructure and servers. Of course, hype exists, leading to some overpricing, and we’ve even started including discounts in valuations to reflect this. While a correction will eventually come, I wouldn’t try to predict its timing.
As of today, the AI core is largely the playground of global tech giants. AI requires massive capital investments, from electricity to computing power, making it difficult for smaller players to compete. Companies like Nvidia, Microsoft, Apple, Alphabet, Amazon, and Meta are investing at unprecedented levels, racing to stay at the forefront. Start-ups can only compete if they offer truly disruptive technology. Their sweet spot is in creating AI applications for specific sectors: finance, insurance, healthcare, education, and many others, where innovation can have a big impact on everyday life.
Even after the ceasefire agreement in October, the effects of the Swords of Iron War and ongoing military activity continued to cast a shadow over the Israeli economy throughout the year. Yet despite these challenges, Israel saw a significant number of exits, the vast majority through M&A deals and only a few via IPOs. Could there be a connection between these trends, and how has it influenced company activity?
We need to keep in mind that Israel is small and it’s home to exceptional entrepreneurs and developers. Yet scaling successful technology or product into a large, profitable company often demands significant capital and customer relations that are harder to come by in a smaller market. Historically, this has encouraged companies to team up with larger partners to reach advanced scale-up stages. Nowadays, there are even more incentives for companies to favor M&A exits over IPOs.
First, Israel’s global reputation is at a low, and interest in IPOs for Israeli companies has declined. This trend started even before the war, after the government introduced its judicial reform, and intensified during the conflict as various boycott groups increased their activity. Beyond this, the dynamics of exits have shifted. IPOs are no longer the only route to a high-value exit; companies today are willing to pay huge sums to acquire promising firms. A prime example is Google’s $32 billion acquisition of the Israeli cybersecurity firm Wiz. While extraordinary, the largest deal in Israeli tech history, it illustrates a broader wave of major transactions in the global tech sector.
Furthermore, the private equity market has grown substantially, with numerous funds now focusing on buying, holding, and later selling companies, not just investing, as was common in the past. These funds often offer significant sums in M&A deals, giving entrepreneurs immediate access to cash. IPOs, on the other hand, provide funds only on paper at first, and require further steps before the money can be realized.
Finally, we cannot ignore the fact that the market is booming. AI and cybersecurity have been driving the global technology sector for years, forming part of a true technological revolution based on real economic value. But as in any hot market, hype is inevitable. Everyone wants a piece of AI and cyber, and some companies are even active in both. Naturally, with so many new entrants, consolidation occurs, larger companies acquire smaller ones, and some of the smaller players disappear altogether.
In the face of last year’s challenges, how did Israeli tech companies fare in raising capital?
In 2025, the local tech sector performed better than the year before. Median valuations and fundraising amounts rose across almost every stage of company growth. Still, Israel lagged behind US trends. While valuations broke records in the US, Israeli companies improved over the previous year but did not reach new highs at any stage.
Looking ahead, what’s in store for the global and Israeli technology sectors in 2026?
Even with the huge rally in technology stocks, the global tech sector is expected to continue growing in 2026, driven by the AI arms race and massive investments from leading tech companies. In addition to AI, robotics, closely linked with AI, and cybersecurity, which protects both fields, are likely to stand out. Quantum computing, a cutting-edge field using quantum physics for complex, high-speed computations, is also expected to make waves. Defense tech could become increasingly important, given rising geopolitical tensions across regions such as Russia-Ukraine-Europe, Israel-Iran, Thailand-Cambodia, and India-Pakistan. Historically, heightened security risks benefit arms suppliers. In Israel, the technology sector should continue improving, though growth may be moderate compared with global trends.