Houlihan Lokey: AI in vertical software, moats, product strategy and M&A, Q1 2026

Houlihan Lokey's Q1 2026 deck on how embedded AI is reshaping vertical software: $222B of US AI/ML VC deal volume in 2025 (+105% y/y), a 22% rise in AI mentions on S&P 500 earnings calls, and sector deep dives on where systems-of-record data moats let vertical players capture AI value through predictive analytics, workflow automation and agentic customer engagement.