North American M&A cools 23% in third quarter as AI sentiment falters

Global deal volume still on track for second-highest year ever

North American merger-and-acquisition activity fell 23% in the third quarter to $560 billion compared with the same period in 2025, according to Mergermarket data. The North American segment is dominated by activity from the United States.

The third-quarter pullback marks a sharp reversal from the first half of the year, when a surge of technology megadeals pushed global dealmaking to records. Around 43% of the year’s total volume came from the second quarter alone, Mergermarket said, propelled in part by OpenAI’s $122 billion fundraising round. The clamor for large transactions faded quickly: the third quarter produced just six megadeals — deals valued at $10 billion or more — compared with 19 in the second quarter. The collapse in megadeal flow drove most of the quarter’s volume decline.

Mergermarket attributed the slowdown to three forces acting on boardrooms simultaneously: fragile AI sentiment, a sharp run-up in borrowing costs, and the drawn-out Middle East conflict. Calls from leading AI executives to slow development of frontier AI models amid heightened safety concerns are also chilling the M&A environment, the report noted.

“I do question whether we are getting to the end of the bull market around AI now,” Mergermarket Executive Editor Lucinda Guthrie said. “Valuations are very high.”

Despite the third-quarter cooling, global M&A volumes rose 27% to $4.44 trillion over the first nine months of the year, a total beaten only by the post-Covid surge in dealmaking of 2021. Technology remained the most active sector globally over the first nine months, with M&A volumes climbing 36% to $1.1 trillion. Healthcare was the second-largest sector by volume, with dealmaking surging 54% over the first three quarters on a rebound in biotech spending.

Only one AI-related deal landed in the third quarter: Nvidia’s $12.9 billion acquisition of open-source AI platform Hugging Face. Megadeals made up 35% of global volume over the first nine months.

Global volumes are up by almost $1 trillion compared with 2025, even though fewer deals are being completed. The deals that are crossing the line are simply larger, with megadeals driving a disproportionate share of the total.

The pattern fits what PwC’s global deals industries leader Brian Levy flagged in September. “The K-shaped M&A market we noted back in January is intensifying,” Levy wrote. The shape reflects a market in which larger companies can more easily bear higher costs of capital, while smaller transactions have thinned out, according to Mergermarket’s Guthrie. Part of the reason, Guthrie added, is that bigger companies can more easily absorb higher costs of capital and a strategic preference for scale has supported the largest deals.

“One of the big stories this year has been around building scale and resilience, because scale and resilience are what you need to deal with the challenges of the geopolitics and macro challenges that we’re facing,” Guthrie said.