By Paul R. La Monica

Merger mania is back, with record deal value globally in the first half of the year. Companies announced $2.6 trillion worth of transactions, according to Dow Jones Market Data and FactSet, up 58% from a year earlier. But the number of acquisitions was roughly the same as this time last year. In other words, companies are focusing on bigger and splashier deals.

Newly public SpaceX made the largest acquisition of the first half of 2026, with its $250 billion purchase of xAI before SpaceX's initial public offering. SpaceX is also in the process of buying Anysphere, the parent of AI coding company Cursor, for $60 billion.

NextEra Energy's nearly $120 billion deal for fellow utility Dominion Energy, the apartment REIT merger of Equity Residential and AvalonBay Communities, and People Inc.'s proposed acquisition of casino company MGM Resorts were other notable deals. Those latter two were both valued at more than $35 billion.

The increased number of gigantic deals could be good news for larger-cap companies in the S&P 500 that might become takeover targets for the mega-caps of the world. But mid-caps and small-caps, which typically get a boost during M&A booms, may not receive as much of a lift.

That hasn't stopped smaller stocks from rallying, though. The Russell 2000 is up more than 20% this year, outperforming the S&P 500, Dow, and Nasdaq. The S&P MidCap 400 is up 15% as well. The resilient U.S. economy is helping to boost earnings expectations for small and mid-sized companies.

But as large-caps continue to rally, don't be surprised to see deal activity pick up in the small and mid-cap arena as well. Big companies may still look to make some fill-in acquisitions — and that could lead to even more gains for smaller stocks.

"The capital markets are open. Money is available for deals, and that's a positive," said James Ragan, co-chief investment officer and director of investment management and research at D.A. Davidson, in an interview with Barron's.

"This is a fairly rich environment for mergers, and you should see more small- and mid-cap acquisitions," Ragan added.

Biotech, in particular, may be a sector to watch. Many large-cap pharmaceutical companies are looking to bolster their drug pipelines by purchasing smaller biotechs that may have promising medications in the research and development phase.

"Trends are looking up, and merger activity in the sector has also heated up," said Jay Woods, chief market strategist for Freedom Capital Markets, in a report. Woods recommends that investors take a basket approach to the sector with the iShares Biotechnology ETF, noting that "the path higher over the coming months looks promising."

Analysts at Jefferies think that software and services companies are likely to do more deals too, especially with valuations depressed due to concerns about AI. Accenture, for example, recently announced it was boosting its budget for M&A this year to $9 billion from an earlier plan of $5 billion.

The merger wave doesn't look ready to crest just yet. And that could benefit both large and small companies ready to play Wall Street's version of "Let's Make a Deal."

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.