Diving overview:
- For the first time, CEOs believe artificial intelligence is the biggest risk, outweighing the potential damage to their industries from geopolitical turmoil, cyber intrusions, and financial and economic instability, the Conference Board announced Thursday.
- The percentage of CEOs planning to increase capital spending in the face of AI challenges jumped from 22% last quarter to 35% this quarter, the Conference Board’s quarterly survey found. At the same time, their Confidence is at its highest level From Q1 2025 onwards.
- Dana Peterson, chief economist at the Conference Board, said in a statement that the rise in CEO confidence signals “a return to optimism among leaders of large companies.” ““CEOs’ expectations for their industry have further improved, moving from mild caution to firm confidence,” she said.
Dive Insight:
CEOs, CFOs, and their C-suite colleagues face two-pronged risks from AI. Investing too little in new technology can result in underperformance compared to more daring rivals. If you invest too much, you may receive only a meager investment return, fail to meet your profit goals, and face the wrath of your investors.
“Federal Reserve President Lisa Cook said in a speech on Tuesday that AI has a big future, but that she is “still cautious about its general adoption.”
“The advent of AI is poised to become the latest example drawn by economist Joseph Schumpeter nearly a century ago of creative destruction,” Cook said, adding, “We appear to be on the verge of the most important job restructuring in generations.”
While AI drives innovation and creates new business opportunities, It may also be costlyshe said.
“As the economy transitions, job displacement may occur before job creation, with unemployment rates rising and labor force participation rates declining,” Cook said. “This outcome could create hardship for many workers and their families.”
In manufacturing, AI could follow the same pattern as electrification more than 100 years ago, yielding significant gains later than expected, according to Federal Reserve President Michael Barr.
“Within companies, there is evidence from manufacturing sectors that productivity follows a J-shaped pattern after technology adoption. Adjustment costs lead to short-term losses before companies that overcome them realize large long-term gains.” Barr said this in a speech on February 17th..
According to the Conference Board, 60% of Fortune 500 CEOs cite AI as a major risk to their industry, an increase of 7 percentage points compared to Q4 2025.
The perceived risk of AI exceeded geopolitical instability and cyber risk by 1 percentage point and 4 percentage points, respectively, the Conference Board said.
According to the Conference Board, 71% of CEOs said the Trump administration’s tariffs are increasing costs for their companies.
According to the Conference Board, 44% of CEOs have passed or plan to pass on tariff costs to customers, while 27% of CEOs run businesses that absorb the cost of import taxes, hurting profits.
