Geopolitical Risk Reshapes CEO Strategy Toward Profitability and AI
Geopolitical instability has become the dominant concern for global business leaders, with 56 percent of CEOs identifying it as the most significant threat to their business over the next 12 months. That represents a 28-percentage-point jump since September 2025, according to the latest EY-Parthenon CEO Outlook Survey of 1,200 executives across 21 countries.
The shift is translating into operational pressure. Nearly half of respondents said sustained energy price shocks would create significant challenges for their organizations.
Rather than retreating, CEOs are responding by tightening operations and focusing on disciplined growth. Eighty-two percent said they are prioritizing sustainable long-term growth and a clear path to profitability over rapid expansion.
AI Investment Accelerates Despite Regulatory Headwinds
Eighty percent of CEOs plan to increase AI investment in 2026, while only 1 percent expect to reduce spending. The focus, however, is shifting from initial adoption to generating enterprise-wide impact.
Forty-two percent of respondents said AI is already contributing to customer value creation. Operations, strategy, and innovation each cited by around 40 percent of executives.
Regulatory complexity is slowing deployment. Thirty percent of CEOs said regulatory frameworks are increasing compliance costs, while 38 percent identified fragmented and evolving regulation as a barrier to scaling AI effectively.
Nearly half of respondents-48 percent-said they are pursuing acquisitions or divestments to accelerate access to AI capabilities. This reflects a growing tendency to use dealmaking as a shortcut to building technological capacity.
Workforce Adaptation, Not Reduction
Concerns about AI-driven job losses are not translating into hiring freezes. Only 20 percent of CEOs said AI would lead to reduced hiring, down from 46 percent in 2024.
Ninety-nine percent of respondents expect AI to change their workforce strategy over the next three years. Forty-two percent anticipate large-scale reskilling and upskilling, while 44 percent are redesigning roles to combine human and AI capabilities.
Talent remains the constraint. One in five respondents identified limited AI and data skills within their workforce as a primary people-related challenge.
M&A Strategy Becomes More Selective
Eighty-nine percent of CEOs planning mergers and acquisitions expect deal activity to increase over the next 12 months. But the approach is becoming more selective, focused on strategic fit rather than scale.
Forty-eight percent of respondents cited the ability to enhance technology or AI capability as the most important consideration in portfolio decisions. Forty-seven percent prioritized alignment with long-term growth.
Sixty-two percent are pursuing traditional mergers and acquisitions, while 57 percent are exploring strategic alliances. Joint ventures interest 45 percent, and 42 percent expect to undertake divestments.
The United States remains the primary M&A destination, followed by India, the United Kingdom, Canada, and Germany.
Learn more: AI for Executives & Strategy and AI Learning Path for CEOs cover how executives are integrating AI into corporate strategy and managing geopolitical risk.
Your membership also unlocks:
