Author: Abram Brown, Nick Wingfield. Everyone, seize the opportunity to pursue mergers and acquisitions while you still can, because the market genuinely offers a number of relatively bargain-priced acquisition targets right now. DoorDash CEO Tony Xu knows this well. On Thursday, Xu finally completed the acquisition of Instacart, with DoorDash announcing it would spend roughly $17 billion to take over the grocery delivery company. Instacart founder Apoorva Mehta posted on X that he and Xu had discussed the deal very early on. Readers of The Information would not be surprised by this, as we reported on acquisition talks between the two companies back in 2021. In 2021, DoorDash considered acquiring Instacart for more than $40 billion.
By biding his time, Xu clearly saved a substantial amount of money, avoiding the inflated valuation premiums attached to pandemic-era star companies. Admittedly, during the pandemic, when people viewed physical supermarkets as potential disease hotspots, Instacart's prospects looked exceptionally bright, but what Xu acquired this time is by no means a worthless mess. In the third quarter, Instacart's revenue grew 17%, its cash flow performance was strong, and its cash increment exceeded $300 million, up 13% year over year. Being acquired by DoorDash also resolved Instacart's management dilemma.
Since Fidji Simo departed in 2025, the company had been without a leader. Even so, Xu still needs to contend with white-hot competition in online grocery retail, with Walmart and Amazon both being major rivals (more on Amazon below). The 2021 acquisition plan was shelved partly because of Xu's concerns about the Biden administration's regulatory stance. According to our reporter Valida Pau, Xu judged at the time that the deal would struggle to pass review by Biden administration regulators, as the Biden government was vigorously suppressing a wave of corporate mergers.
The M&A winter has passed, and now a golden window for deals has arrived: the Trump administration takes a fairly lax attitude toward merger approvals. But as the midterm elections approach, the situation could reverse again. Democrats are expected to retake control of Congress next week, and President Trump's public approval rating is already as low as a DoorDash courier delivering a box of broken eggs. Compared with a few months ago, the likelihood of a Democrat holding the White House after 2028 has risen substantially. The prospect of a Democratic White House will push a large number of M&A deals to close before the window shuts.
The remarks of New York Mayor and Democratic figure Zohran Mamdani confirm that since Biden left office, the left's attitude toward corporate mergers has barely changed. On Thursday, Mamdani publicly attacked DoorDash's acquisition of Instacart, saying such mergers tend to drive up consumer prices and "intensify the exploitation of workers." Apart from political factors, the M&A wave will most likely continue for a simple reason: there are still plenty of companies on the market that have lost their shine in the "post-pandemic era," such as Zoom, Duolingo, Coursera, and too many examples to list. Bumble would originally have been among them, but a few weeks ago the company was taken private by investor Ravi Gupta (Gupta's acquisition price was about $6 per share, while Bumble's stock once exceeded $75).
Another driver of M&A comes from the opportunity to transform traditional companies with AI, and Thursday's other acquisition deal was presumably motivated by this: Josh Kushner, through his newly established Thrive Holdings (a subsidiary platform under Thrive Capital), spent $7.6 billion to acquire home security device maker ADT. The reason I am discussing M&A at such length also stems from earlier this week, when I heard remarks from Kim Posnett, global co-head of investment banking at Goldman Sachs, at the WTF summit. It appears that private messages from CEOs eager to do deals have flooded her inbox. "Companies are driving business growth through M&A, using M&A to reposition themselves in the new AI industry landscape. Corporate CEOs are actively positioning themselves and willing to bet on large strategic deals, and we are optimistic about this." But she also pointed out, "The situation changes in an instant." — Abram Brown.
Amazon's Anxiety
Over the past two days, Amazon and Google earnings reports have sent a signal: investors now prefer to focus on a company's problems and flaws rather than the standout growth of its cloud business. On Thursday, Amazon disclosed that AWS revenue soared 39% to $45.98 billion, the fastest growth in nearly four years. AWS growth had already reached a high of 37% in the second quarter, making this report card truly remarkable. Not only that, Amazon CEO Andy Jassy predicted that AWS growth would exceed 40% in 2027-2028.
On the analyst call, Jassy further predicted that within the next 5-10 years, AWS could become one of two Amazon businesses with $100 billion in annual revenue; the other is the retail stores business, which is how Amazon refers to e-commerce and other segments excluding AWS. But this was not enough to reassure investors. With tech giants pouring astronomical sums into AI, more and more investors are uneasy about whether sustainable returns can be achieved. Amazon's stock fell more than 6% after hours. The company's total net sales were $201.9 billion, up 12% year over year; net profit was $20.7 billion, a slight decline from last year, when Amazon recorded a $9.5 billion pre-tax gain on its investment in Anthropic.
Although all the figures fell within the company's guidance range, Wall Street analysts had originally expected better results. The company maintained its 2026 capital expenditure at $220 billion, with the vast majority of the funds going toward data center construction. Google faced a similar situation today, with investors voting with their feet and the stock plunging 12%. Investors appeared to place more weight on the negative signals in Wednesday's earnings report (weak revenue growth in the core search advertising business) while ignoring the bright spots (Google Cloud revenue doubled outright). For many investors, the outlook for AI is a mix of promise and concern. — Nick Wingfield
Comments