Global M&A rebounded to 4.8 trillion dollars in 2025, with more than 60 percent of large transactions classified as scope deals that acquire new capabilities and markets rather than scale, and roughly one in three of the top 100 deals explicitly citing artificial intelligence (AI) as part of the strategic rationale. In parallel, adoption of AI tools by M&A practitioners more than doubled, with 45 percent now using AI across the deal cycle, compressing diligence from six to eight weeks to 10–14 days and accelerating integration timelines by up to 40 percent. This paper synthesizes survey insights from manufacturing strategy and corporate development leaders, together with 30 interviews with chief strategy and M&A officers, to examine how AI is reshaping three domains: deal thesis and diligence, portfolio management, and the emerging frontier of “physical AI” in industrial operations. It distills ten empirical learnings on how AI is now a core deal thesis, a structured risk screen that can kill transactions, a productivity engine across sourcing and integration, and a new source of valuation blind spots when traditional metrics fail to capture data flywheels, model quality, and AI talent density. On the operating side, the paper analyzes case studies from BMW and Amazon to illustrate how digital twins, robotics, and physical AI systems are rewriting plant economics, supply chain dynamics, and maintenance models, delivering 25–50 percent performance gains and projected three year ROIs exceeding 400 percent. Building on these findings, I propose a practical “AI disruption screen” for CSOs, a revised capital allocation framework that recognizes the AI capex supercycle, and a new mandate for strategy, corporate development, and transformation leaders as allocators, integrators, and governors of enterprise AI portfolios. The goal is to give manufacturing and industrial leaders a research grounded, tool supported blueprint for using AI to reshape strategy, portfolios, and deals rather than treating it as a narrow technology initiative.