Geopolitics reshapes CEO priorities as firms focus on profitability, AI and dealmaking

Geopolitical instability has become the dominant concern for global business leaders, prompting a shift in corporate strategy towards profitability, resilience and targeted growth, according to the latest EY-Parthenon CEO Outlook Survey. The quarterly study, based on responses from 1,200 CEOs across 21 countries, suggests that executives are adapting to what they see as a prolonged period of structural uncertainty by tightening their focus on disciplined investment, artificial intelligence and strategic transactions. More than half of respondents, 56 percent, identified geopolitical risk as the most significant threat to their business over the next 12 months, representing a rise of 28 percentage points since September 2025. The findings indicate that geopolitical pressures are now shaping boardroom priorities more directly than in previous years.

This shift is reflected in operational concerns. Nearly half of those surveyed, 46 percent, said that sustained energy price shocks would create significant challenges for their organisations, underlining the extent to which geopolitical developments are translating into financial and operational risks.

Despite this backdrop, the survey suggests that companies are not retreating. Instead, CEOs report that they are responding by strengthening resilience and focusing on profitability, drawing on experience from previous periods of disruption.

Eighty two percent of respondents said they are prioritising sustainable long-term growth and a clear path to profitability over rapid expansion. This approach includes a greater emphasis on financial flexibility, streamlined operations and investment in technology, alongside a more selective approach to capital allocation.

The findings point to a broader shift towards what the report describes as disciplined growth. Rather than pursuing scale for its own sake, companies are focusing on targeted investments that are aligned with long-term strategy and capable of delivering returns in uncertain conditions.

AI. What else?

Artificial intelligence remains a central element of this strategy. The survey found that 80 percent of CEOs plan to increase AI investment in 2026, while only 1 percent expect to reduce spending. The results suggest that AI continues to be seen as a key driver of competitiveness across sectors and regions.

The focus, however, is shifting. Rather than prioritising initial adoption, companies are increasingly looking to generate enterprise-wide impact from AI. Respondents reported that AI is already contributing to areas such as customer value creation, cited by 42 percent, operations at 41 percent, strategy at 41 percent and innovation at 40 percent.

AI investment is also influencing corporate transactions. Nearly half of respondents, 48 percent, said they are pursuing acquisitions or divestments to accelerate access to technology or AI capabilities. This reflects a growing tendency to use dealmaking as a means of building technological capacity.

At the same time, the survey highlights a number of constraints on AI adoption. Thirty percent of CEOs said that regulatory frameworks are increasing compliance and operational complexity, while 38 percent identified fragmented and evolving regulation as a barrier to scaling AI effectively.

Workforce strategy is also evolving in response to AI. While concerns about job displacement have been widely discussed, the survey suggests that most CEOs are focusing on adapting roles rather than reducing headcount.

Almost all respondents, 99 percent, said they expect AI to change their workforce strategy over the next three years. However, only 20 percent said that AI would lead to a reduction in hiring, a decrease from 46 percent in 2024.

Instead, companies are investing in skills and organisational change. Forty two percent of CEOs said they anticipate large-scale reskilling and upskilling of employees, while 44 percent reported that they are redesigning roles to combine human and AI capabilities.

The findings indicate that talent constraints remain a significant challenge. One in five respondents identified limited AI and data skills within the workforce, along with insufficient leadership capability to manage AI-driven change, as their main people-related issues.

Alongside investment in AI and skills, companies are continuing to pursue transactions as part of their growth strategy. The survey found that 89 percent of CEOs planning mergers and acquisitions expect their deal activity to increase over the next 12 months, although the approach is becoming more selective.

Rather than focusing primarily on scale, organisations are placing greater emphasis on strategic fit and capability building. AI is a key factor in this process, with 48 percent of respondents citing the ability to enhance technology or AI capability as the most important consideration in portfolio decisions. This was followed by alignment with long-term growth priorities, cited by 47 percent.

The survey outlines a range of transaction strategies being considered by CEOs. Sixty two percent of respondents said they are pursuing mergers and acquisitions, while 57 percent are focusing on strategic alliances. Joint ventures are being explored by 45 percent, and 42 percent expect to undertake divestments.

Geographically, the United States remains the primary destination for planned M&A activity, followed by India, the United Kingdom, Canada and Germany. The findings suggest that companies are targeting markets that offer opportunities for growth and access to technology.