Q1 global mergers and acquisitions surpass $1.2 trillion! The AI frenzy reshapes the landscape, with deal volume rising 26% against the trend

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The global M&A market has demonstrated strong resilience amid geopolitical turmoil and market volatility.

According to Reuters, data from the London Stock Exchange Group shows that in the first quarter of 2026, the total value of global M&A transactions exceeded $1.2 trillion, up 26% year-on-year, setting a record high for the same period. Although the number of deals fell 17% year-on-year, the size of individual deals expanded significantly, with AI-related deals and cross-border M&A becoming the main drivers.

Unlike last year’s Trump “Day of Liberation” tariff policy that led to a standstill in M&A activity, the impact of the outbreak of conflict in the Middle East at the end of February this year on companies’ willingness to pursue deals was relatively limited. Sam Kim, head of global M&A at Deutsche Bank, said, “This time, people are no longer waiting for the situation to improve; they recognize that volatility is the norm and are moving deals forward within this framework.” George Holst, global head of advisory at BNP Paribas, revealed that this year the bank’s M&A pipeline has increased by more than 20% compared with last year in both number and value.

AI deals lead large-scale M&A, and the equity investment trend stands out

Large deals dominated the market landscape this quarter.

LSEG data shows that in the first quarter, there were 22 deals with deal sizes exceeding $10 billion, setting a quarterly record. Among the six largest deals, four are directly related to AI. OpenAI’s $1100 billion financing round accounts for three of the six on its own, while Anthropic’s $300 billion financing is tied for fourth.

Notably, all of the above four deals are equity investments, not traditional M&A. LSEG data indicates that such equity investment deals account for 29% of the total deal volume this quarter, and this trend is accelerating as it expands further.

Meanwhile, M&A activity has clearly cooled for software companies that the market sees as “losers” in the AI competition or as particularly vulnerable. Investors have continued to sell off related stocks, reducing the valuations of these targets, and dealmakers say.

Market turbulence did not stop deals; companies turn to more cautious strategies

Although the Middle East conflict has triggered an unprecedented shock to oil supply, causing sharp fluctuations in oil prices and major swings in corporate valuations, companies’ board strategies have been to raise screening standards rather than abandon M&A.

Philipp Beck, head of M&A for EMEA at UBS Investment Bank, said, “The driving force behind M&A lies in strategic logic, which is more fundamental than short-term market volatility.” He added that if volatility persists for months rather than weeks, and further disrupts inflation, interest rates, and growth expectations, “then market dynamics may change, but we are not there yet.”

John Collins, co-head of global M&A at Morgan Stanley, said that corporate clients will still view M&A as an important driver of growth. “If volatility eases somewhat, we may see a situation similar to the busy conditions in the second half of last year.”

Cross-border M&A surges; the U.S. becomes the largest target market for M&A

Cross-border M&A has become another core theme this quarter. LSEG data shows that cross-border M&A deal value increased 47% year-on-year in the first quarter, reaching $4547 billion, the highest level for the same period since 2002.

The United States is the most favored M&A target market, accounting for 52.4% of the total value of cross-border deals, with the UK in second place at 11.5%. Notable transactions include: U.S. condiment giant McCormick’s acquisition of the UK food business of Unilever, which after the merger will form a global food giant with a market value of $650 billion; and French company Engie’s announcement last month that it will acquire a UK power network company for $213 billion.

Andrew Woeber, head of global M&A at Barclays, said, “Cross-border corporate activity is a decisive trend we are witnessing, and CEOs and boards no longer wait for the perfect moment.” Holst of BNP Paribas also noted that for European companies facing pressure from slowing domestic growth, completing deals in the U.S. is particularly attractive—U.S. growth is stronger, corporate valuations are higher, and there is local production capacity that can provide tariff protection.