Jones Day: AI Is Fueling a Record M&A Boom, but Valuations Have Reached Dangerous Levels

The mergers and acquisitions market is reaching record volumes as of July 7, 2026, according to Bloomberg, and AI technology is the main driver. Robert Profuzek, a partner at Jones Day and one of the leading corporate lawyers in the US, describes the situation with unexpected caution: AI company valuations have climbed to unprecedented levels, private capital is still on the sidelines, and the question of the boom's long-term sustainability remains open.

What Is Driving the Record Deal Market

According to Profuzek, three forces have converged to create the current wave of M&A activity.

AI as a strategic imperative. Corporations in the technology, finance, healthcare and industrial sectors are buying up AI assets out of fear of falling behind competitors technologically. When a deal is dictated by strategic necessity and not only by expected returns, the buyer is systematically willing to overpay. This pressure, the "buy now or lose the market" logic, pushes valuations to levels detached from any fundamental metrics.

Excess free capital. Institutional investors have accumulated record liquid reserves and face pressure from limited partners who want the money put to work. Competition for quality AI assets has grown so intense that a convincing growth story immediately attracts several rival buyers.

A softer regulatory environment. Antitrust priorities in the US have shifted: deals that would have been blocked in regulatory corridors a few years ago now pass without serious resistance. This has opened the market to mergers previously considered legally unfeasible.

Profuzek calls the coincidence of all three factors historically rare, which is why the current boom looks so rapid.

Why Private Equity Is Staying on the Sidelines

Against the backdrop of record volumes, one anomaly stands out: private equity funds are mostly observers rather than participants in deals.

Profuzek's explanation is blunt: sellers' expectations are too high. Owners of AI companies look to the public multiples of sector leaders and set price tags that are incompatible with the PE returns model. For a fund with a 5–7 year investment horizon and strict IRR commitments to its partners, an inflated entry price makes a deal unprofitable in the base case.

Profuzek characterizes current AI valuations as unprecedented. The market is paying not for existing cash flow but for growth forecasts that are extremely hard to verify in standard financial models. Any slowdown in AI revenue growth or deterioration in the macroeconomic environment could expose the weakness of current multiples.

In previous M&A cycles, a large-scale arrival of PE signaled that the market had moved into a mature, stable phase with clear pricing. Its absence now is an analytical indicator that the market is still in a mode of initial strategic frenzy, not backed by financial discipline.

What This Means

The record M&A boom is unusual: huge in volume, but lopsided in its mix of participants. Strategic buyers will pay any price for a position in AI, while financial investors wait for valuations to correct. If the price gap between sellers and financial buyers does not narrow, the boom risks stalling before PE capital, which historically gives market cycles long-term stability, enters it. Jones Day is openly signaling this risk.