CEO confidence dips in revenue growth prospects, most yet to see AI returns: PwC survey

Davos, Jan 19 (PTI) CEOs have turned less confident about the near-term revenue growth potential of their companies, and most of them are yet to see financial returns on investments in AI, an annual survey by PwC showed on Monday.

Releasing their 29th Global CEO Survey here on the first day of the World Economic Forum Annual Meeting here, PwC said the CEOs see a world beset by challenges in the year ahead.

The survey, based on responses from 4,454 chief executives across 95 countries and territories, showed they have grown significantly less confident about the short-term growth outlook for their companies and more worried about a range of threats, including macroeconomic volatility, cyber risk, and geopolitical conflict.

At the same time, they are focusing on multi-year opportunities to reinvent the business, and CEOs are forging ahead with investment in AI even though immediate returns are often elusive, PwC said.

"They are prioritising innovation. And many are entering new sectors as they lean into a reconfiguration of industries that's reshaping the global economy. Importantly, CEOs moving fast on these dimensions of reinvention are outperforming their peers," the survey said.

Although close to a third (30 per cent) reported increased revenue from AI in the last 12 months and a quarter (26 per cent) are seeing lower costs, more than half (56 per cent) said they have realised neither revenue nor cost benefits.

More than 40 per cent said their companies have started to compete in new sectors in the last five years.

Among those planning large acquisitions over the next three years, four in ten expected to do deals in other sectors or industries.

Only 30 per cent were very or extremely confident about revenue growth over the next 12 months, down from 38 per cent in last year's survey and the recent peak of 56 per cent in 2022.

Almost a third of CEOs (29 per cent) said tariffs will reduce their company's net profit margin over the next 12 months. The majority (60 per cent) expected little to no change.

Among those expecting margin compression, most anticipated only a slight decline.

Two-thirds of CEOs (66 per cent) said stakeholder trust concerns have arisen in at least one area of business operations over the last 12 months.

There is a significant gap in total shareholder returns over this period between public companies experiencing the most and the fewest trust concerns, PwC said.

CEOs said they spend nearly half (47 per cent) of their time on issues with time horizons of less than one year, which is three times more than the 16 per cent dedicated to activities with a horizon of more than five years. PTI BJ BAL BAL