CEO Outlook 2026 | AI Transformation and Growth Strategy

CEO Outlook 2026 Overview and Key Findings

The EY CEO Outlook 2026 paints a picture of global business leadership navigating a paradox: softening confidence amid accelerating transformation capability. Based on an anonymous online survey of 1,200 CEOs from large companies across 21 countries conducted by FT Longitude between November and December 2025, the report reveals how the world’s most influential business leaders are balancing short-term cost pressures with the imperative to build long-term competitive advantage through technology and strategic portfolio reshaping.

As CEOs look ahead, one theme dominates: the need to adapt and continue transforming at unprecedented speed. Persistent geopolitical uncertainty and uneven economic momentum are intensifying the pressure to reimagine the enterprise — further and faster — with AI adoption acceleration emerging as the central pillar of organizational adaptability. The survey spans respondents from five industries — consumer and health, financial services, industrials and energy, infrastructure, and technology — providing a comprehensive cross-sector view of executive sentiment and strategic intent.

The findings reveal a leadership class that has moved beyond questioning whether AI will transform their organizations to actively orchestrating how and where that transformation delivers the greatest impact. Portfolio reshaping, strategic deals, and efficiency programs — now frequently powered by AI and automation — are giving CEOs a stronger baseline from which to navigate disruption with confidence.

CEO Confidence Index Trends and Economic Outlook

The EY-Parthenon CEO Confidence Index declined from 83.0 to 78.5 in January 2026, representing the most significant directional shift in the survey’s recent history. This index, derived from CEO ratings across 15 statements on a 5-point scale covering sector growth, prices and inflation, company growth, talent, and investment and technology, provides a nuanced barometer of executive sentiment that extends well beyond simple optimism-pessimism measures.

The most pronounced concern driving the decline centers on global economic growth expectations. Leaders are reassessing demand projections in an environment shaped by geopolitical tensions, ongoing supply chain realignments, and decelerating activity across major economies. This concern aligns with EY-Parthenon’s global economic outlook, which projects global real GDP growth easing from 3.3% in 2025 to 3.1% in 2026 — a modest but meaningful deceleration that compounds existing pressures on corporate revenue growth.

Compounding macroeconomic uncertainty is diminishing confidence in managing rising operating costs — particularly energy, labor, and compliance expenditures. Many CEOs also express reduced optimism about their ability to pass higher costs on to customers, signaling weakening pricing power as both consumers and business clients become increasingly value sensitive. This erosion of pricing flexibility forces harder trade-offs between investment in future capabilities and near-term margin protection.

Despite these headwinds, the index reveals persistent bright spots. Confidence in talent management and technology investment remains elevated, suggesting that while CEOs are cautious about macroeconomic conditions, they believe they have assembled the internal capabilities — particularly in AI and digital infrastructure — necessary to generate growth independent of favorable market conditions. This divergence between macro pessimism and micro confidence represents a defining feature of the 2026 leadership mindset.

AI Transformation Moving From Pilots to Enterprise Scale

The 2026 CEO Outlook documents what may be the most significant inflection point in enterprise AI adoption: the transition from broad experimentation to targeted, disciplined scaling. While previous surveys captured executives’ excitement about AI’s potential, this edition reveals leaders who have identified specific business units, processes, and decision points where AI can deliver quantifiable improvements in productivity, decision quality, and customer value.

This maturation reflects hard-won lessons from the first wave of GenAI deployment. Many organizations discovered that impressive demos and pilot results did not automatically translate into enterprise-scale impact. The gap between “works in a lab” and “works reliably across thousands of users with appropriate governance” proved more substantial — and more expensive — than initially anticipated. The CEOs surveyed in 2026 have internalized these lessons and are now deploying AI with surgical precision rather than aspirational breadth.

The key tension identified in the report — balancing short-term cost pressure with long-term competitiveness — manifests most clearly in AI investment decisions. Leaders must justify continued AI spending to boards and shareholders demanding immediate returns while simultaneously building the infrastructure, data foundations, and organizational capabilities that will determine competitive positioning over the next decade. Those who resolve this tension successfully will establish advantages that late movers will struggle to replicate.

AI and automation are increasingly integrated into the core strategic toolkit rather than treated as technology initiatives. Portfolio reshaping decisions, efficiency programs, and even M&A target selection are now informed by AI-generated insights and executed with AI-powered operational capabilities. This integration marks AI’s graduation from a supporting technology to a core business driver.

Operational Optimization and Digital Productivity Gains

Operational optimization and productivity gains — including digitalization — emerge as the primary strategic objective for CEOs in 2026, with 50% identifying this as their top priority. This emphasis reflects a pragmatic response to the dual pressures of rising costs and uncertain demand: when the external environment becomes harder to predict, leaders focus on what they can control — the efficiency and effectiveness of their own operations.

Digitalization has evolved from a discrete initiative to an embedded organizational capability. Companies that invested in digital infrastructure during the pandemic era are now realizing compounding returns as those platforms enable AI deployment, real-time analytics, and automated decision-making at scale. The integration of AI into enterprise resource planning, supply chain management, and customer relationship platforms is creating operational efficiencies that traditional process improvement methodologies could not achieve.

The productivity imperative extends beyond cost reduction to encompass workforce augmentation. Rather than replacing employees, the most effective AI deployments are amplifying human capability — enabling analysts to process more data, customer service representatives to resolve issues faster, and managers to make better-informed decisions. This augmentation model generates productivity gains while maintaining the human judgment and creativity that remain essential for complex business challenges.

Companies that have successfully embedded digital productivity tools report not just cost savings but improved organizational agility — the ability to redirect resources, adjust strategies, and respond to market changes faster than competitors. In an environment where volatility is the only constant, this operational agility may prove more valuable than any specific efficiency gain.

Cost Pressures and Pricing Power Challenges

CEOs face a challenging cost environment in 2026, with rising operating expenses across energy, labor, and compliance creating margin compression that many leaders acknowledge they cannot fully offset through pricing. The erosion of pricing power — driven by value-conscious consumers and intensifying competition — represents a structural shift that demands operational responses rather than simple price increases.

Energy costs continue to reflect the complex interplay of geopolitical tensions, decarbonization investments, and demand fluctuations. Labor markets, while showing signs of rebalancing in some regions, remain tight for high-skill roles — particularly those involving AI, data science, and digital engineering. Compliance costs are escalating as regulatory frameworks for AI, data privacy, ESG reporting, and cross-border operations multiply and evolve.

The report suggests that CEOs are responding to this cost pressure through three primary strategies: accelerating automation of routine processes (reducing labor intensity), investing in AI-powered decision tools (improving resource allocation efficiency), and restructuring operations geographically to optimize cost structures while maintaining proximity to growth markets. This multi-pronged approach reflects the recognition that no single lever is sufficient to address the breadth of cost challenges facing large enterprises.

Notably, the most resilient companies in the survey are those that treated cost optimization not as a reactive exercise but as an ongoing discipline embedded in corporate culture. These organizations had established continuous improvement frameworks, technology-enabled monitoring systems, and decentralized decision-making authorities that enabled rapid cost adjustments without requiring top-down restructuring programs.

M&A as a Catalyst for Strategic Transformation

Perhaps the most striking finding in the 2026 CEO Outlook is the redefinition of M&A’s strategic role — from a growth tool to a transformation accelerator. With 50% of CEOs citing operational optimization and productivity gains as the primary acquisition objective, deals are increasingly designed to import capabilities that would take years to build organically: AI expertise, digital infrastructure, talent pools, and proven operating models.

Similarly, 45% of CEOs prioritize accelerating top-line growth through acquisitions, reflecting a desire to expand into new markets, strengthen competitive positioning, and capture demand adjacencies. This dual focus on efficiency and growth mirrors the broader transformation agenda that characterizes the 2026 CEO mindset — leaders want both, and they see M&A as the vehicle to achieve both simultaneously.

What distinguishes M&A as a transformation tool is speed. Organic transformation, while essential, often requires years of investment, cultural change, and technology deployment before measurable results materialize. A well-targeted acquisition can deliver capabilities, talent, technology, and market access quickly — effectively pulling forward transformation benefits that might otherwise take three to five years to develop internally. Whether acquiring an AI-native business, buying into a high-growth segment, or integrating a company with superior operational practices, M&A enables companies to compress timelines and overcome internal constraints.

However, the report emphasizes that realizing these advantages depends on integration intentionality from the earliest stages of the deal lifecycle. Value drivers must be clearly articulated, rigorously tracked, and actively managed from diligence through execution. Early focus allows efficiencies and synergies to be identified, measured, and captured rather than assumed — a critical distinction that separates successful transformation-oriented deals from those that destroy value through poor execution.

Joint Ventures and Strategic Alliances Growth

The most dramatic year-over-year shift in the 2026 CEO Outlook is the surge in strategic alliance and joint venture plans: 79% of CEOs intend to pursue such initiatives in 2026, up sharply from 62% in 2025. This 17-percentage-point increase reflects growing recognition that partnerships offer a pragmatic alternative to full acquisitions, particularly in markets and technology domains where uncertainty, regulatory complexity, or capital constraints make outright ownership impractical.

Joint ventures and alliances enable companies to access new capabilities, share development costs, and distribute risk while maintaining strategic flexibility. In the AI domain specifically, partnerships with technology companies, academic institutions, and specialized AI firms allow traditional enterprises to accelerate their capabilities without the integration complexity and cultural risk associated with acquisitions. These collaborations are particularly valuable for exploring nascent technologies or entering unfamiliar markets where local knowledge is essential.

The rise in alliance activity also reflects the increasing complexity of the challenges facing large enterprises. No single company — regardless of scale — possesses all the capabilities required to navigate simultaneous transitions in AI, sustainability, geopolitics, and digital infrastructure. Strategic partnerships allow organizations to assemble capability portfolios that would be prohibitively expensive or time-consuming to build internally.

The report notes that successful alliances in 2026 share several characteristics: clear governance frameworks, aligned strategic objectives, defined contribution and benefit sharing, and predetermined exit mechanisms. Companies that approach partnerships with the same rigor they apply to M&A due diligence and integration planning consistently report better outcomes than those that treat alliances as informal arrangements.

Geopolitical Risk and Cross-Border Strategy

Since 2016, cross-border M&A has steadily lost share as rising jurisdictional friction has reframed the strategic calculus of international deals. Geopolitics has become a central deal variable: US-China tensions, sanctions regimes, and supply chain de-risking have made foreign acquirers more likely to face political resistance, extended regulatory timetables, and elevated execution risk. The 2026 CEO Outlook confirms that these dynamics are intensifying rather than abating.

CEOs must navigate an increasingly complex geographic landscape where the benefits of global scale compete with the risks of political exposure. The report reveals leaders making deliberate choices about where to pursue growth — and where to prioritize flexibility and risk management, sometimes pulling back from markets where geopolitical dynamics create unacceptable uncertainty. This selective approach to geography represents a significant departure from the globalization-is-good consensus that characterized corporate strategy for decades.

Supply chain realignment continues to reshape global investment patterns. Companies are diversifying manufacturing bases, establishing regional supply networks, and investing in nearshoring capabilities — often at significant near-term cost — to reduce vulnerability to geopolitical disruption. These investments, while strategically essential, compete for capital with AI transformation and organic growth initiatives, creating portfolio allocation challenges that test leadership judgment.

The report identifies companies that align capital allocation, transformation priorities, and AI scaling through a geographic lens as best positioned to outpace competitors as conditions improve. This integrated approach — considering where to invest, what to build, and which technologies to deploy as interconnected rather than independent decisions — distinguishes strategic leaders from organizations that treat geography, technology, and transformation as separate planning exercises.

Talent Strategy and Workforce Transformation

Despite softening overall confidence, CEOs maintain strong optimism about their ability to attract, develop, and retain the talent necessary for transformation. The survey data positions talent management as one of the highest-confidence categories in the CEO Confidence Index, suggesting that leaders believe their organizations have built compelling value propositions for the workforce despite macroeconomic uncertainty.

The talent challenge in 2026 is qualitative rather than quantitative. While overall labor markets show signs of rebalancing, competition for AI engineers, data scientists, digital strategists, and transformation leaders remains intense. Companies are responding by investing in internal development programs that reskill existing employees, creating hybrid roles that combine domain expertise with technological fluency, and establishing partnerships with universities and training providers to build talent pipelines.

The workforce transformation driven by AI adoption requires careful management of employee expectations and concerns. Organizations that communicate transparently about how AI will change roles, invest in reskilling programs, and demonstrate that technology augments rather than replaces human work report higher employee engagement and faster AI adoption rates. Those that implement AI without adequate change management often face resistance that undermines the technology’s potential impact.

Leadership development itself is evolving to address the unique demands of managing AI-augmented organizations. CEOs recognize that traditional management skills — while still essential — must be supplemented with technological literacy, data-driven decision-making capability, and the ability to lead through continuous transformation rather than periodic restructuring. The next generation of enterprise leaders must be equally comfortable discussing algorithmic bias and competitive strategy.

Strategic Priorities for CEO Leadership in 2026

The 2026 CEO Outlook ultimately reveals a leadership class that has accepted permanent transformation as the operating norm rather than a transitional phase to be endured before returning to stability. The year ahead demands sharper portfolios deliberately designed for uncertainty, disciplined AI scaling anchored in measurable outcomes, and renewed commitment to transformational innovation in a world being reshaped by intelligent technology.

For CEOs navigating 2026, five strategic imperatives emerge from the survey data. First, accelerate AI scaling by focusing on the highest-impact business units rather than pursuing broad deployment. Second, treat M&A as a transformation accelerator — using deals to import capabilities faster than organic investment allows. Third, build geographic flexibility through diversified operations and strategic alliances. Fourth, maintain talent investment discipline even amid cost pressures, recognizing that workforce capability is the foundation of every other strategic initiative. Fifth, establish governance frameworks that enable speed while maintaining the controls necessary for responsible AI deployment.

The report’s most powerful insight may be its framing of the current moment: 2026 is unlikely to be benign, but it brings clearer direction. Companies that have invested in digital resilience, AI capability, and adaptive talent strategies now possess a stronger baseline from which to compete than at any previous point. The winners will not be those who predict the future most accurately, but those who build organizations capable of thriving regardless of which future materializes.

As EY-Parthenon’s analysis makes clear, the race is not to the company with the most advanced AI, the largest deal pipeline, or the most diversified geographic footprint — but to the one that integrates all three into a coherent strategy executed with discipline and adaptability. The CEO Outlook 2026 provides both the data and the framework for leaders ready to meet that challenge.