During the first half of 2025, the U.S. mergers and acquisitions (M&A) market took an unexpected turn. While early in the year concerns grew in financial markets about a sharp decline in deal activity, artificial intelligence (AI) emerged as a key driver that helped offset the slowdown and even contributed to an overall increase in deal value. According to updated data from Dealogic, although the number of deals is down approximately 18% compared to the same period last year, the total value of deals this year has increased by 10%.

It appears that many of the most notable deals in recent months have been concentrated in the AI sector. Leading technology companies and private equity firms are repositioning themselves amid the growing understanding that rapid AI developments are reshaping the business landscape across virtually all industries.

An AI-Driven Wave of Deals

One of the most significant deals highlighting this trend was Meta’s (NASDAQ: META) $14 billion acquisition of Scale AI. This followed Salesforce’s purchase of AI-driven data platform Informatica (NASDAQ: INFA) in May, an $8 billion deal.

The largest transactions, however, took place back in March, when Google (NASDAQ: GOOG, GOOGL) acquired cloud security platform Wiz for $32 billion. At the same time, Japan’s SoftBank led a $40 billion funding round for ChatGPT-maker OpenAI. According to Dealogic, seven of the fifteen largest U.S. M&A transactions so far this year have been driven by strategic positioning in AI.

Lucinda Guthrie, head of data at Mergermarket, noted: “Any sector that is relatively insulated from regulatory or trade disruption is seeing heightened activity, and AI is clearly such an area, with an open race for leadership.”

The Regulatory and Macro Context

This new wave of AI-related deals gained additional momentum after the Trump administration announced a package of tariffs in early April. AI transactions, which tend to be either domestic or globally diversified, are viewed by financial players as a natural hedge against the effects of trade wars.

As highlighted in PwC’s half-yearly report, the current focus extends beyond just AI technology or language models, encompassing the entire supporting ecosystem: data centers, industrial energy, and advanced communications infrastructure. This trend has led to a series of significant deals even in sectors like industrials, energy, and services.

Notable examples outside of software include Constellation Energy’s $16 billion merger with Calpine Corporation and NRG Energy’s $12 billion purchase of 18 power plants across Texas and the East Coast. Company executives pointed to the growing demand for energy as AI usage expands, with NRG CEO Larry Coben stating that the U.S. is “in the early stages of a power demand supercycle.”

Market Challenges and a Mixed Picture

Despite the dominance of AI-related transactions, the broader M&A market remains mixed. Mid-sized companies face greater difficulty in forecasting the costs associated with tariffs and new regulatory constraints, with about 30% pausing or re-evaluating deals, according to a PwC executive survey from May.

In line with this, leading investment bank executives reported at a recent Morgan Stanley conference that Q2 started slowly. Morgan Stanley CEO Ted Pick remarked that “investment banking is currently a tale of two quarters,” with early-year weakness followed by expectations for improvement. Similarly, Citigroup’s head of banking, Viswas Raghavan, highlighted continued uncertainty but noted that fee income is projected to increase compared to last year.

Broadly speaking, analysts believe AI’s influence on the M&A market has not yet peaked. Industries such as automotive, precision medicine, communications, and aerospace are expected to enter the AI-driven M&A space in the coming months. These sectors, undergoing profound technological transformation, may represent the next wave of AI-related deal activity.

Outlook for the Second Half of the Year

While challenges persist in industries not directly tied to AI, deals in this space continue to drive M&A market momentum. For now, there are no clear signs of a slowdown in AI-driven transactions, and the outlook suggests that the trend will continue, particularly as more companies enter the field and supporting infrastructure continues to expand.

In conclusion
artificial intelligence has become a core engine of growth for the M&A market in 2025. Even as other areas of the market remain cautious or face regulatory headwinds, AI-driven deals remain the sector’s saving grace. If this trend holds, the second half of the year may see modest improvement or even an acceleration in overall M&A activity as more firms seek to align with AI advancements.