The CEO Imperative series

CEO Survey October 2023: Focus on GenAI strategy to accelerate growth


Our latest survey finds US executives are optimistic about revenue, profits, transactions and GenAI.

CEOs’ profitability expectations for their companies are overshadowing economic fears.

Business leaders are also optimistic about the promise of GenAI strategy to accelerate business transformation. While it could take years for generative AI investments to play out, tech transformation needs to happen now and is high on CEOs’ agendas as they contemplate how artificial intelligence (AI) can give them a strategic advantage, according to the October 2023 EY CEO Outlook survey.

Meanwhile, CEOs are closely watching geopolitical, macroeconomic and market risk, and the continued high cost of capital. Our latest survey shows CEOs expect higher growth in revenue and profitability in 2024 compared with 2023.

CEOs cautiously optimistic on adopting generative artificial intelligence technology

Notably, all the CEOs we surveyed are making or planning significant investments in GenAI — with the caveat that many remain uncertain about the direction the technology will take.

CEOs are in a quandary. While 62% agree their organizations must act now on GenAI to avoid giving competitors a strategic advantage, 61% say uncertainty around GenAI makes it challenging to develop and implement an AI strategy. 

With the speed of AI developments, the cost involved, ethical considerations, potential regulatory scrutiny, and other uncertainties, funding plans for now are multilayered: 37% of CEOs plan to reallocate capital from other investment budgets, 34% say they will primarily raise new capital, and 26% indicate they will reallocate capital specifically from technology budgets.

Are you currently making or planning significant investments in generative AI, and if so, how are you funding this?

A circle chart showing 100% of US respondents are making significant investments in GenAI
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    A circle chart showing 100% of US respondents are making significant investments in GenAI. A bar chart shows how they will fund GenAI:

    37% are primarily reallocating capital from other investment budgets.

    34% primarily raising new capital

    26% primarily reallocating capital from our technology budgets 

    3% say an equal mix of reallocating capital and raising new capital

As companies consider the investments required to build AI capabilities tailored to their business needs, leaders face significant choices and challenges in their GenAI strategy. These include whether to use open-source or proprietary large language models (LLMs) for their AI systems, and whether to build, buy or partner on their AI systems. Many businesses may claim they have AI experience, but 55% of CEOs agree it’s hard to identify credible partners or acquisition targets.

A key differentiator for the C-suite will be the proprietary data, gathered from across the enterprise, used to train and enrich LLMs. CEOs need to prioritize a robust data strategy in their GenAI-driven business transformation.

The pace of innovation in AI is light speed and CEOs need to move fast to gain a competitive advantage. But there are big strategic questions.
Khalid Khan
Principal, EY-Parthenon, Ernst & Young LLP

The speed and maturity of technology may drive transactions

As adoption of transformative AI and other technologies moves at a rapid pace, CEOs indicate a robust appetite for transactions, at a time when they’re also more optimistic about their companies’ financial outlook.

Do you expect to actively pursue any of the following transaction initiatives over the next 12 months?

A circle chart showing 93% of US respondents expect to actively pursue transactions
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    A circle chart showing 93% of US respondents expect to actively pursue transactions. Bar charts show:

    52% Mergers and acquisitions

    58% Divestments/spin-offs/initial public offering

    63% Joint ventures or strategic alliances with third parties 

The US has led a rebound in mergers and acquisitions (M&A) this year, and our survey reflects it: 52% of US CEOs plan M&A over the next 12 months, considerably higher than our global survey, which finds only 35% planning deals. In addition, 58% of CEOs plan to divest an asset in that period as leaders seek to fund capital spending in multiple areas. Also high on the CEO agenda is forming joint ventures or strategic alliances with third parties (63%) as leaders contemplate lower-risk ways to embrace innovative technologies.

M&A advisory: Buy and integrate

We help enable strategic growth through better integrated and operationalized mergers and acquisitions, JVs and alliances.

Read more

Not all assets coming to market are underperforming. Changing market and governance/regulatory conditions mean companies need to divest healthy assets.
Andy Lorenzetti
EY Americas Sell and Separate Leader

What could curb all this enthusiasm? Geopolitical uncertainty could dampen profit expectations; according to CEOs, the top two barriers to maximizing revenue growth and profitability in 2024 are increasing investment costs, and slower economic growth in key markets. With AI buzz as a backdrop, CEOs acknowledge they need a multi-layered investment strategy for 2024. Research and development (R&D) is the most likely to see higher investment in 2024, followed closely by acquisitions.

Divestment strategy: sell and separate

Portfolio management via divesting can help improve value from carve-out, spin-off or JV.

Read more

How will your investments in the following areas change as a percentage of revenue in 2024 compared with 2023?

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    Four ring charts show how US respondents' investments will change as a percentage of revenue from 2023 to 2024 in R&D, capex, acquisitions and corporate venture capital.

Geopolitical events are a concern, given the potential impact on startup innovation, particularly regarding AI.
Elizabeth Kaske
EY Americas Buy and Integrate Leader

The Strategy and Transactions team

Photographic portrait of Dr. Khalid A. Khan

Dr. Khalid A. Khan
EY-Parthenon Principal, Quantitative Strategies and Solutions, Ernst & Young LLP

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Andy P Lorenzetti
EY Americas Sell and Separate Leader

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Photographic portrait of Elizabeth Kaske

Elizabeth Kaske
EY Americas Buy and Integrate Leader

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In this series

The US CEO Outlook Survey (October 2023) is a part of the CEO Imperative Series, which provides critical answers and actions to help CEOs reframe the future of their organizations. This edition covers CEO perspectives on GenAI and transactions.

Download US CEO Outlook Survey – October 2023

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Download US CEO Outlook Survey – July 2023

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Download US CEO Outlook Survey - January 2023

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