Mergers and acquisitions (M&A) are making a comeback after slowing down in the second quarter due to uncertainty around politics and trade, according to Barclays (BCS) analysts. As a result, they expect a strong finish in 2025 and even faster growth in 2026. More specifically, Barclays is forecasting $2.3–$2.4 trillion worth of deals in the U.S. alone next year, which is close to the all-time highs of 2021. This rebound is being driven by lower market volatility in the U.S., better financing conditions in Europe, and the hype that’s surrounding AI.
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It’s worth noting that in Q2, dealmaking slowed down mostly because of declining stock prices and higher credit spreads, which especially hurt U.S. deals. However, with interest rates starting to fall and stock prices rising again, activity has picked up. In fact, as of the end of September, M&A volume had increased by 13% in the U.S. and by 16% in Europe compared to the same period last year. And although Barclays believes that a slower U.S. economy may slightly limit growth going forward, Europe could accelerate it thanks to recent rate cuts by the European Central Bank.
Another potential catalyst is the way deals are being funded. In the U.S., less than 25% of M&A financing came from debt this year, with companies relying more on equity instead. However, Barclays expects this trend to revert to the long-term average of 32% in 2026. If debt financing returns to this historical level, it could lead to about $200 billion in new investment-grade bonds, which would be a major boost for the bond market and a strong signal that companies are confident about making deals again.
Is QQQ Stock a Good Buy?
Since rising stock prices are playing an important role in driving up M&A activity, we will look at Wall Street’s expectations for the Invesco QQQ Trust ETF (QQQ), which tracks the Nasdaq 100. Interestingly, analysts have a Moderate Buy consensus rating on QQQ stock based on 90 Buys, 12 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average QQQ price target of $682.84 per share implies 12.7% upside potential.
