Geopolitical instability has ascended to the forefront of concerns for global business leaders, compelling a significant recalibration of corporate strategies. This pivotal shift, detailed in the latest EY-Parthenon CEO Outlook Survey, signals a move away from aggressive expansion towards a more measured approach prioritizing profitability, enhanced resilience, and strategically targeted growth. The quarterly analysis, which canvassed the perspectives of 1,200 chief executive officers across 21 nations, indicates a widespread adaptation by executives to what they perceive as an enduring period of structural uncertainty. This adaptation is manifesting in a more disciplined approach to investment, a heightened focus on artificial intelligence (AI), and a strategic re-evaluation of corporate transactions.
The survey’s findings underscore the gravity of the current geopolitical climate. A substantial 56 percent of respondents identified geopolitical risk as the most significant threat poised to impact their businesses over the ensuing twelve months. This figure represents a dramatic surge of 28 percentage points since September 2025, highlighting a palpable escalation in the perceived threat landscape. This data firmly establishes that geopolitical pressures are now exerting a more direct and influential sway on boardroom priorities than in previous years, altering the fundamental calculus of corporate decision-making.
The Tangible Impact of Geopolitical Shifts on Operations
The ramifications of this heightened geopolitical awareness are not confined to strategic discussions; they are demonstrably translating into tangible operational challenges. Nearly half of the surveyed CEOs, specifically 46 percent, indicated that sustained energy price shocks would pose significant hurdles for their respective organizations. This acknowledgment serves as a stark illustration of how global political developments are directly impacting financial stability and operational continuity, creating ripple effects that touch every facet of business. The volatility in energy markets, often a direct consequence of geopolitical tensions, necessitates proactive strategies to mitigate cost fluctuations and ensure reliable supply chains. This could involve diversification of energy sources, investment in energy efficiency, or long-term hedging strategies.
A Strategic Pivot: Embracing Disciplined Growth
Despite the prevailing backdrop of uncertainty and potential disruption, the survey data suggests that companies are not adopting a posture of retreat. Instead, CEOs are reporting a strategic evolution characterized by a deliberate strengthening of organizational resilience and an intensified focus on profitability. This strategic pivot is informed by lessons learned from navigating previous periods of disruption, fostering a more robust and adaptable business model.
A resounding 82 percent of respondents are now prioritizing sustainable, long-term growth and a clearly defined pathway to profitability over the pursuit of rapid, potentially unsustainable expansion. This strategic reorientation encompasses a more pronounced emphasis on bolstering financial flexibility, optimizing operational efficiency, and making judicious investments in technological advancements. Concurrently, there is a more selective and discerning approach to capital allocation, ensuring that every investment aligns with the overarching objective of long-term value creation.
The findings collectively point towards a broader paradigm shift, which the report terms "disciplined growth." This approach eschews the pursuit of scale for its own sake, instead championing targeted investments that are intrinsically aligned with long-term strategic objectives and possess the inherent capability to deliver robust returns even amidst prevailing uncertainties. This signifies a maturation of corporate strategy, moving beyond short-term gains to build enduring value.
Artificial Intelligence: A Continued Imperative in a Shifting Landscape
Artificial intelligence (AI) remains a central and increasingly critical element within this evolving corporate strategy. The survey reveals a strong and consistent commitment to AI, with an overwhelming 80 percent of CEOs planning to increase their investments in AI during 2026. Conversely, a negligible 1 percent of respondents anticipate a reduction in AI spending. These figures strongly suggest that AI continues to be universally recognized as a pivotal driver of competitiveness across a diverse array of sectors and geographical regions.
However, the nature of AI investment is undergoing a subtle but significant evolution. The focus is shifting away from the initial stages of adoption and towards the generation of enterprise-wide impact. Respondents reported that AI is already contributing meaningfully to various critical business functions. Specifically, 42 percent of CEOs noted AI’s impact on customer value creation, 41 percent cited its contribution to operational efficiency, another 41 percent highlighted its role in strategic decision-making, and 40 percent recognized its influence on innovation. This indicates a move towards leveraging AI for deeper, more integrated business transformation.
AI as a Catalyst for Strategic Transactions
The strategic integration of AI is also profoundly influencing corporate transaction strategies. Nearly half of the surveyed CEOs, representing 48 percent, indicated that they are actively pursuing acquisitions or divestments with the express goal of accelerating their access to advanced technology or AI capabilities. This trend underscores a growing propensity to utilize mergers, acquisitions, and divestitures as strategic tools for building and enhancing technological capacity, recognizing that in-house development may not always be the most efficient or effective route.
Navigating the Regulatory and Workforce Implications of AI
Despite the widespread enthusiasm for AI, the survey also brings to light several significant constraints and challenges that are impacting its adoption and scaling. A considerable 30 percent of CEOs pointed to the increasing complexity of regulatory frameworks, which are augmenting compliance burdens and operational intricacies. Furthermore, 38 percent of respondents identified fragmented and rapidly evolving regulations as a substantial barrier to effectively scaling AI initiatives across their organizations. This highlights the need for clearer, more consistent, and forward-looking regulatory guidance to foster innovation.
The impact of AI on workforce strategy is also a prominent theme, revealing a nuanced evolution in how companies are approaching their human capital. While concerns about job displacement due to AI have been a persistent topic of discussion, the survey suggests that the predominant focus among CEOs is on adapting existing roles rather than on widespread headcount reductions.
An almost unanimous 99 percent of respondents expect AI to fundamentally alter their workforce strategies over the next three years. However, a notable shift is evident in hiring intentions: only 20 percent of CEOs anticipate that AI will lead to a reduction in overall hiring. This represents a significant decrease from the 46 percent who expressed this concern in 2024, indicating a growing confidence in AI’s ability to augment rather than purely replace human labor.
Instead of focusing on job elimination, companies are channeling their efforts into investing in new skills and fostering organizational change. A significant 42 percent of CEOs anticipate the need for large-scale reskilling and upskilling of their existing workforce to align with AI-driven demands. Complementing this, 44 percent of respondents reported that they are actively redesigning roles to create synergistic combinations of human and AI capabilities, recognizing the power of human-AI collaboration.
However, talent constraints continue to pose a significant challenge in this evolving landscape. One in five respondents identified limited AI and data skills within the current workforce, alongside insufficient leadership capabilities to effectively manage AI-driven transformations, as their primary people-related issues. This underscores the critical need for strategic talent development and leadership training to unlock the full potential of AI.
Strategic Transactions: A More Focused and Capability-Driven Approach
Alongside substantial investments in AI and workforce development, companies are continuing to leverage strategic transactions as a core component of their growth strategies. The survey indicates that 89 percent of CEOs planning mergers and acquisitions (M&A) anticipate an increase in their deal activity over the next twelve months. However, this surge in activity is being accompanied by a more selective and discerning approach to deal-making.
The emphasis is shifting away from a primary focus on achieving scale towards a greater prioritization of strategic fit and capability building. AI has emerged as a critical determinant in this process, with 48 percent of respondents citing the enhancement of technology or AI capabilities as the most crucial consideration in their portfolio decisions. This was closely followed by alignment with long-term growth priorities, a factor cited by 47 percent of CEOs.
The survey further delineates a range of transaction strategies that CEOs are actively exploring. A majority of respondents, 62 percent, are pursuing mergers and acquisitions, while 57 percent are focusing their efforts on forging strategic alliances. Joint ventures are being considered by 45 percent of CEOs, and 42 percent anticipate undertaking divestments as part of their strategic portfolio management.
Geographic Focus of Strategic Investments
Geographically, the United States continues to represent the primary destination for planned M&A activity, reflecting its robust technological ecosystem and market opportunities. Following the U.S., India emerges as the second most targeted region, indicating its growing significance as a hub for innovation and growth. The United Kingdom, Canada, and Germany round out the top five destinations for M&A, suggesting that companies are strategically targeting markets that offer not only promising growth prospects but also vital access to cutting-edge technology and specialized talent pools. These findings underscore a global trend towards strategic, capability-driven expansion in an increasingly complex geopolitical and economic environment.
