By Brian Levy, Global Deals Industries Leader, PwC US
AI investments and an explosion of megadeals are creating a K-shaped M&A market. The capital expenditure supercycle may constrain M&A activity in the near term before sparking an innovation supercycle that will drive the next wave of deals.
Momentum heading into 2026 suggests that global M&A is entering a new phase. A late-2025 surge in megadeals (transactions more than $5bn in value) and AI thematics have carried into the new year, pointing to a market that is structurally reshaping rather than simply rebounding from a subdued cycle. Deal value is expected to remain elevated in 2026 even as volumes remain muted, with headline-making activity increasingly concentrated in the largest transactions and among the best-capitalised buyers.
Three forces are likely to define what’s next for M&A. First, AI is accelerating strategic change across industries; pulling forward decisions on scale, capabilities, data, and talent; and reshaping deal strategy and execution. Second, global dealmaking is becoming more polarised and K-shaped, with strength concentrated in a small number of markets, led by the US. This concentration is also evident across a narrow set of sectors, most notably technology. Third, the macroeconomic backdrop of decelerating global growth, lower interest rates, and abundant capital is reinforcing a two-speed M&A market in which confidence has clearly returned at the top end, while activity elsewhere remains more constrained.
As we discuss, our view of AI’s impact on dealmaking is nuanced. Investment in AI is being directed towards data centres, energy, and other infrastructure as well as technology development and customisation. In the near term, the scale of this multitrillion-dollar investment may divert capital and temper M&A activity. Over the medium term, however, AI’s potential to trigger an innovation supercycle is likely to reignite dealmaking as companies accelerate transformation, reposition portfolios, and acquire critical capabilities.
At the same time, AI is accelerating sector convergence, blurring traditional boundaries and reshaping deal activity. For example, technology companies are investing directly in energy and power infrastructure, while industrial and healthcare companies are acquiring data, analytics and software capabilities to embed AI across operations and R&D.
