Key Findings

  • The Conference Board reported last week that CEOs have, for the first time, identified artificial intelligence as their top risk, surpassing geopolitical turmoil, cyber intrusions, and financial and economic instability in terms of potential harm to their industries.
  • Facing the challenges posed by AI, the proportion of CEOs planning to increase capital expenditures jumped from 22% in the previous quarter to 35% this quarter. Meanwhile, the Conference Board's quarterly survey showed CEO confidence rising to its highest level since the first quarter of 2025.
  • Dana Peterson, chief economist at the Conference Board, said in a statement that the rise in CEO confidence marks a "restoration of optimism among leaders of large enterprises." She noted that "CEOs' expectations for their own industries have further improved, shifting from cautious optimism to solid confidence."

In-Depth Analysis

CEOs, CFOs, and other C-suite executives are facing a dual risk from AI: underinvesting in emerging technologies could leave them behind bolder competitors, while overinvesting could result in poor returns, missed profit targets, and investor dissatisfaction.

Federal Reserve Governor Lisa Cook said Tuesday: "AI has enormous potential, but I am cautious about its widespread adoption." She added in a speech: "The emergence of AI will become the latest example of what economist Joseph Schumpeter described nearly a century ago as 'creative destruction,' and we seem to be approaching the most significant reorganization of work in generations."

Cook pointed out that while AI can spur innovation and create new business opportunities, it also carries costs. "Job losses may precede job creation, and as the economy transitions, unemployment could rise and labor force participation could fall. This outcome could bring hardship to many workers and their families."

Federal Reserve Governor Michael Barr believes that in manufacturing, AI may follow a pattern similar to electrification over a century ago, with returns materializing more slowly than expected. Barr said in a speech on February 17: "Within firms, there is evidence in manufacturing that productivity follows a J-curve after technology adoption: adjustment costs cause short-term losses, after which firms that persist achieve larger, longer-term gains."

The Conference Board said that 60% of CEOs at Fortune 500 companies listed AI as their top industry risk, up 7 percentage points from the fourth quarter of 2025. AI's perceived risk exceeded geopolitical instability and cyber risk by 1 and 4 percentage points, respectively.

The Conference Board also found that 71% of CEOs said tariffs imposed by the Trump administration have raised corporate costs. Of these, 44% have passed tariff costs on to customers or plan to do so, while 27% of CEOs' companies absorbed the import tax costs themselves, squeezing profit margins.