Geopolitical instability has become the dominant concern for global business leaders, prompting a significant recalibration of corporate strategy towards profitability, resilience, and targeted growth, according to the latest EY-Parthenon CEO Outlook Survey. This pivotal quarterly study, encompassing the perspectives of 1,200 CEOs across 21 countries, reveals a pronounced adaptation by executives to what they perceive as an extended era of structural uncertainty. The response involves a more disciplined approach to investment, a heightened focus on artificial intelligence (AI), and a strategic re-evaluation of mergers and acquisitions.
The survey’s findings are stark: a substantial 56 percent of respondents identified geopolitical risk as the most significant threat to their businesses over the next twelve months. This figure represents a dramatic surge of 28 percentage points since September 2025, underscoring a rapid escalation in the perceived immediacy and impact of global geopolitical tensions on corporate operations and planning. The data unequivocally indicates that geopolitical pressures are now exerting a more direct and pervasive influence on boardroom priorities than in previous years, fundamentally altering the risk landscape for businesses worldwide.
This heightened awareness of geopolitical threats is not an abstract concern; it is translating directly into tangible operational challenges. Nearly half of the surveyed CEOs, specifically 46 percent, reported that sustained energy price shocks would create significant hurdles for their organizations. This statistic powerfully illustrates the direct economic ramifications of geopolitical developments, highlighting how international conflicts and political realignments can trigger volatility in critical commodity markets, thereby impacting operational costs and supply chain stability.
Despite this challenging geopolitical backdrop, the survey dispels any notion of widespread corporate retrenchment. Instead, the prevailing sentiment among CEOs is one of strategic adaptation and fortification. Leaders are actively responding by bolstering their organizations’ resilience and sharpening their focus on achieving sustainable profitability, drawing valuable lessons from past periods of disruption, including the COVID-19 pandemic and previous economic downturns. This proactive stance suggests a mature understanding that navigating uncertainty requires not withdrawal, but rather enhanced preparedness and strategic agility.
A compelling 82 percent of respondents indicated that they are prioritizing sustainable, long-term growth and a clear, predictable path to profitability over aggressive, rapid expansion. This strategic pivot signifies a move away from growth-at-all-costs mentalities towards a more measured and financially prudent approach. The emphasis is now on building businesses that are not only capable of expanding but are fundamentally robust and financially healthy, able to weather economic storms and geopolitical shocks. This strategy includes a greater emphasis on enhancing financial flexibility, streamlining operational processes for greater efficiency, and making targeted investments in technology that promises tangible returns and competitive advantages. Furthermore, there is a more selective approach to capital allocation, ensuring that every investment aligns with long-term strategic objectives and contributes to overall resilience and profitability.
The survey findings collectively point to a broader paradigm shift towards what the report aptly describes as "disciplined growth." This philosophy moves beyond the pursuit of sheer scale as an end in itself. Instead, companies are concentrating their resources and strategic efforts on highly targeted investments that are intrinsically aligned with their long-term vision and possess a proven capacity to deliver consistent returns even amidst the volatility and unpredictability of the current global environment. This approach prioritizes quality of growth over quantity, ensuring that expansion is sustainable and value-generating.
AI: The Unwavering Engine of Future Competitiveness
Within this evolving strategic landscape, artificial intelligence (AI) continues to emerge as a central and indispensable element. The survey data reinforces the pervasive belief in AI’s transformative power, with an overwhelming 80 percent of CEOs planning to increase their investment in AI throughout 2026. This overwhelming commitment is juxtaposed by the fact that a mere 1 percent of respondents anticipate a reduction in AI spending. These figures suggest a near-universal recognition of AI’s ongoing role as a critical driver of competitiveness across virtually all sectors and geographic regions.
However, the nature of AI investment and its application is demonstrably shifting. The focus is moving beyond initial adoption and exploration towards generating tangible, enterprise-wide impact. CEOs are increasingly looking to AI not just as a novel technology, but as a tool to fundamentally enhance business operations, customer engagement, and strategic decision-making. The survey highlights that AI is already making significant contributions in several key areas: 42 percent of respondents reported AI’s positive impact on customer value creation, while 41 percent cited its influence on operations, another 41 percent on strategy, and 40 percent on innovation. This indicates a maturation of AI integration, moving from experimental phases to demonstrable business value.
This strategic integration of AI is also profoundly influencing corporate transaction strategies. Nearly half of the surveyed CEOs, specifically 48 percent, revealed that they are actively pursuing acquisitions or divestments with the explicit goal of accelerating their access to critical technologies or advanced AI capabilities. This trend underscores a growing inclination to leverage dealmaking as a strategic lever for building and augmenting technological prowess, recognizing that acquiring specialized AI expertise or platforms can be a faster and more effective route to innovation than internal development alone.
Despite the widespread enthusiasm for AI, the survey also sheds light on significant constraints that are impeding its broader adoption and scaling. A notable 30 percent of CEOs expressed concerns that evolving regulatory frameworks are increasing compliance burdens and operational complexity. Furthermore, 38 percent identified fragmented and constantly changing regulations as a primary barrier to effectively scaling AI initiatives across their organizations. This points to a critical need for clearer, more consistent, and internationally harmonized regulatory guidelines to facilitate responsible AI deployment.
Evolving Workforce Strategies in the Age of AI
The transformative impact of AI is also necessitating a significant evolution in workforce strategies. While discussions surrounding job displacement due to AI have been prominent, the survey’s findings suggest a more nuanced reality. The prevailing approach among most CEOs appears to be one of adapting and augmenting existing roles rather than wholesale headcount reduction.
An almost universal 99 percent of respondents anticipate that AI will fundamentally alter their workforce strategies over the next three years. However, the perceived impact on hiring is less drastic than some might expect. Only 20 percent of CEOs indicated that AI would lead to a reduction in overall hiring, a notable decrease from 46 percent in 2024. This suggests a shift in focus from simply cutting roles to reimagining them.
Instead of a focus on reducing staff, companies are channeling their efforts into investing in skills development and organizational restructuring. A substantial 42 percent of CEOs anticipate large-scale reskilling and upskilling initiatives for their employees, reflecting a proactive approach to equipping their workforce with the competencies needed to collaborate with AI. Concurrently, 44 percent reported that they are actively redesigning job roles to foster a synergistic combination of human expertise and AI capabilities. This highlights a vision of human-AI collaboration rather than outright replacement.
However, the survey also underscores that talent constraints remain a significant challenge in this transition. One in five respondents identified limited AI and data skills within the existing workforce, coupled with insufficient leadership capability to effectively manage AI-driven change, as their primary people-related issues. This indicates a critical need for investment not only in technical skills but also in leadership development to navigate the complexities of AI integration.
Strategic Transactions: A Refined Approach to Growth
Alongside substantial investments in AI and workforce development, companies are continuing to utilize strategic transactions as a core component of their growth strategies. The survey reveals that 89 percent of CEOs planning mergers and acquisitions (M&A) anticipate an increase in their deal activity over the next twelve months. This sustained appetite for M&A, however, is being met with a more discerning and selective approach.
The primary driver for these transactions is no longer solely the pursuit of scale. Organizations are placing a significantly greater emphasis on strategic fit and the intrinsic capability-building potential of any proposed deal. AI has emerged as a critical determinant in this process. A significant 48 percent of respondents cited the ability of a target company to enhance their own technology or AI capabilities as the most important consideration in their portfolio decisions. This was closely followed by alignment with long-term growth priorities, identified by 47 percent of CEOs.
The survey outlines a diverse range of transaction strategies being actively considered by business leaders. A majority of respondents, 62 percent, indicated they are pursuing traditional mergers and acquisitions. Strategic alliances are also a popular avenue, with 57 percent of CEOs focusing on this approach. Joint ventures are being explored by 45 percent of companies, and 42 percent anticipate undertaking divestments to streamline their portfolios and focus on core strengths.
Geographically, the United States continues to be the most attractive destination for planned M&A activity, reflecting its robust economy and leading technological innovation landscape. Following the U.S., India has emerged as a significant hub for M&A, indicating its growing economic influence and potential for growth. Other key destinations include the United Kingdom, Canada, and Germany. These findings suggest that companies are strategically targeting markets that not only offer promising growth opportunities but also provide access to critical technologies and specialized talent pools, further reinforcing the interconnectedness of geopolitical stability, technological advancement, and strategic investment.
