The Forecast
Morgan Stanley now expects global mergers and acquisitions to reach a record $6.4 trillion in 2026. That would pass the 2021 peak, the last time cheap money and corporate confidence set off a deal frenzy.
The first half already backs up the call. Announced transactions totaled $2.8 trillion through June, up 48% from a year earlier and the strongest six-month start since data collection began in 1980. Deals picked up speed in the second quarter, with announced volume jumping more than 64% from the prior year and completed deals rising more than 33%.
What Is Driving It
Three forces are pushing the numbers. Regulators under the current administration have signaled they will wave through large deals that would have drawn a fight a few years ago. Companies are racing to buy their way into artificial intelligence infrastructure rather than build it. And private equity firms are sitting on roughly $4.3 trillion of committed cash they need to put to work.
The deal flow is not spread evenly. Software, utilities, energy, and healthcare are carrying the load. That mix tells you where boards see the next decade: the power and data centers behind AI, and the drug pipelines that big pharma is buying to replace expiring patents.
The Way to Play It
The cleanest read on a deal boom is the firms that collect a fee on every transaction. Goldman Sachs sits at the front of that line. The stock is up more than 3% and trades near $1,063, close to its 52-week high of $1,125. It sells for about 19 times earnings and 2.6 times book value, and it pays a 1.6% dividend on a $17 annual payout. Advisory fees drop almost entirely to the bottom line, so a record deal year flows straight into profit.
Morgan Stanley, the firm making the forecast, is up more than 2% near $224, also within reach of its 52-week high. It trades at about 20 times earnings and yields close to 1.8%. Its wealth-management arm smooths out the swings that hit pure trading desks, which is part of why the stock has run this far.
Both names have already climbed a long way, so the boom is not a secret. The risk is that a deal cycle turns on confidence, and confidence can vanish fast. A market shock, a jump in borrowing costs, or a regulator that changes its mind can freeze a pipeline in weeks.
What Comes Next
Bank earnings season starts next week, and the advisory numbers will show whether the forecast is holding. Watch the deal backlog each firm reports. A fat backlog means the fees are booked and waiting. A thinning one would be the first sign that the record year is more hope than order book.
