How the S&P 500 quietly becomes bigger than 500 companies 🤝

A coming M&A boom could mean S&P companies add a lot of businesses 💼

M&A deals are expected to jump in 2025. (Source: Goldman Sachs)

One of the more popular themes in Wall Street’s outlook for 2025 is expectations for a mergers and acquisitions (M&A) boom thanks to a business-friendly incoming president.

“With the election now behind us, an expected reduction in regulatory uncertainty should boost that confidence,” Goldman Sachs’ David Kostin wrote in his 2025 outlook report. “During the past four years, federal regulators adopted an aggressive antitrust posture and challenged many proposed business combinations. The uncertainty of completing a deal dissuaded many management teams from pursuing acquisitions.”

Kostin believes 2025 could come with 750 deals, each worth north of $100 million. That would be a roughly 25% jump from this year’s M&A deal volume. In his report, he identifies and recommends buying the stocks of companies likely to be acquired.

“Looking forward, solid economic and earnings growth, relatively loose financial conditions, and rising CEO confidence should support increased M&A activity in 2025,” he said.

Wells Fargo’s Chris Harvey — who has a Street-high 7,007 year-end target for the S&P 500 — also expects higher M&A activity to be bullish for stocks in the years to come. He estimates “a slight late-2025 benefit from a pickup in M&A activity,“ and his 2026 earnings forecast assumes a “wave of M&A announced by mid-2025, closing near the end of 2025, and generating incremental revenue for most of 2026.”