Why CEOs are Turning to M&A for AI-Propelled Growth

Amid economic uncertainty, growing geopolitical tensions, persistent volatility and rising cost pressures, business leaders are navigating strategic decisions through technological transformation.

As AI moves from experimental adoption to enterprise-wide deployment, C-suite executives are reframing their operational models to harness AI's potential as a competitive differentiator.

This transformation was evident at the World Economic Forum 2026 in Davos, where Microsoft CEO Satya Nadella discussed how AI could shape the global economy's ongoing technological evolution in his keynote address.

While broader economic pressures persist, including the impact of US President Donald Trump's tariffs on firms like Amazon, technology leaders are prioritising AI investments as a path through uncertainty.

According to EY-Parthenon's latest CEO Outlook Survey, business leaders are demonstrating more confidence in their companies' prospects than in the outlook for the global economy.

In the quarterly survey of 1,200 global CEOs across 21 countries, the CEO Confidence Index shows that overall sentiment has dipped from 83.0 in Q3 of 2025 to 78.5 in Q4 of 2025. The index measures this sentiment from 1 to 100 across a range of business areas.

Nine in 10 respondents are confident in their ability to strengthen performance from within, expecting revenue and productivity growth to support their companies' profitability in 2026. Around three in five (61%) expect this will increase operating costs, but leaders remain willing to act.

The survey shows that CEO respondents are more likely to accelerate investments in response to geopolitical or trade policy developments (40%) then delay (31%) or stop investment activity (10%).

EY Global Chair and CEO Janet Truncale says: "Today's most successful CEOs are confident in their ability to operate under uncertainty, acting boldly to embrace new technologies at speed and foster confident collaboration to gain competitive advantage."

AI: From experiment to enterprise necessity

With AI adoption evolving rapidly, EY recognises it is no longer an addition but a requirement of business models.

The survey shows that 58% of leaders are expecting AI to be a major growth engine in the next two years, while 32% believe it will fundamentally reshape operations as they scale these technologies enterprise-wide.

More than half of respondents say they have begun significant transformation initiatives this year, with 45% saying they are planning to begin the same to increase business value.

Global Vice Chair of EY-Parthenon Andrea Guerzoni says: "Despite the hype around outsized gains, the reality for CEOs is much more complex.

"AI is meeting and somewhat exceeding expectations for many CEOs, but only a standout 20% are capturing breakthrough returns, and they will be in a strong position to forge ahead, making AI more of an engine than an experiment."

Andrea notes that this reflects the fact that CEOs "are taking a realistic and pragmatic view on the need to add new skillsets".

The gap between early AI adopters and the broader market could indicate that successful implementation requires not just technological investment but fundamental organisational capability building.

Technology-led M&A gains strategic priority

M&A is on the rise as a necessity within CEO strategy, particularly for acquiring AI capabilities and talent. Around five in five (79%) respondents are planning joint ventures and strategic alliances in 2026, an increase of 17% from the previous year.

This approach reflects a growing recognition that building AI expertise organically may not move quickly enough to capture competitive advantages.

According to the survey, 83% of CEOs have adapted their strategic investments in the past 12 months as a response to trade policy developments. At the same time, 40% have reported an acceleration in investment for the same reason.

"2026 is not going to be a year of certainty, and CEOs know this," Andrea adds.

"The winners will be those who actively rewire their capital allocation, navigate geopolitical complexity and focus on technology-led M&A to fashion flexible, resilient portfolios that are built not only to absorb further potential market shocks, but also to maximise opportunities presented by ongoing market volatility."

As business leaders balance economic uncertainty with technological opportunity, AI emerges as both a strategic imperative and a practical tool for operational resilience.

Janet adds: "In the year ahead, business leaders need to execute decisively and intentionally by scaling innovation, investing in talent and working closely within their organisation and across industries to create new value."