Deals and discipline: What’s driving markets at mid-year?

The 2026 mid-year M&A landscape remains remarkably resilient, characterized by elevated deal volumes and a shift toward proactive corporate strategy. Despite geopolitical volatility and commodity price fluctuations, markets have absorbed shocks effectively, with the S&P 500 showing significant gains following recent conflicts. A central driver of current activity is the massive capital expenditure required for AI integration, forcing companies to prioritize scale and geographic diversity to maintain growth. While sponsor-led M&A has slowed, corporate strategics are increasingly aggressive, moving to secure market positions through cross-border deals. Companies are now under heightened pressure to demonstrate return on invested capital, particularly within AI-exposed sectors. Ultimately, the current low cost of capital provides a strategic window for firms to de-risk balance sheets and reposition for long-term growth, even as the market remains sensitive to potential shifts in AI investment momentum.