CFOs are worried about geopolitics and inflation. But they’re still chasing growth

U.S. Bank’s CFO survey of 1,000 senior finance leaders shows geopolitics/war as the top risk at 35%, followed by high inflation at 34%, with only 36% positive on the U.S. economy over the next 12 months. Nearly half of CFOs say it is harder to pass costs to customers, yet they still plan to pass through 55% of cost increases on average, and 49% expect to pursue acquisitions over the next year. AI is shifting toward accountability, with ROI tracked on 41% of AI investments and 47% of measured investments producing positive returns.

Analysis

The key signal is not that CFOs are cautious; it’s that they are becoming selective allocators under persistent uncertainty. That tends to favor firms with variable cost bases, pricing discipline, and working-capital leverage over businesses that need broad-based volume acceleration to hit targets. The second-order effect is margin dispersion: companies with fragmented supply chains, energy intensity, or low customer switching costs will see more earnings volatility as pass-through lags, while scaled incumbents with hedging, procurement power, and channel control can preserve spread.

The most important near-term catalyst is that “delay, not cancel” behavior keeps option value alive for capex and M&A. That is bullish for enablers of corporate transaction activity and balance-sheet tools, but it also means a potential capex air pocket can reappear if oil or FX shocks persist into the next 1-2 quarters. In that case, software and industrial vendors exposed to project timing will see bookings pushed rather than lost, which can create an ugly setup for valuation when revenue recognition finally slows.

AI is moving from story to scorecard, which should widen the gap between vendors selling measurable workflow automation and those selling vague “AI” exposure. The market is still likely overpaying for names whose monetization is years out; the better trade is to own companies where AI reduces opex or improves throughput today. Conversely, if ROI scrutiny tightens further, spending will concentrate in a narrower set of proven use cases, pressuring the long tail of speculative AI beneficiaries.

The contrarian view is that the current caution may actually be constructive for margins: if companies are refusing to overcommit on new projects but still raising prices and pursuing M&A, earnings could prove more resilient than consensus expects over the next 2-3 quarters. The risk to that thesis is a second inflation impulse or renewed geopolitical spike that forces pass-through rates beyond what consumers can absorb, at which point revenue growth starts to break before cost cutting can fully offset it.

Key Decisions for Investors

• Long BRK.B vs short IWM for 3-6 months: favor large-cap balance-sheet strength, pricing power, and hedging capability over small caps that are more exposed to delayed pass-through and capex deferrals; target 8-12% relative outperformance if volatility stays elevated.
• Long ACN or GOOGL vs short a basket of speculative AI names for 3-9 months: prefer measurable ROI and enterprise spending durability over narrative-driven AI exposure; use a pair to isolate the accountability transition and limit market beta.
• Buy LHX/TDY on weakness into any defense/industrial pullback tied to delayed capex headlines, 1-2 quarters out: these names benefit if CFOs prioritize efficiency and control spending rather than broad cancellation; stop if procurement cyclicality accelerates beyond expectations.
• Short an equal-weight basket of energy-intensive consumer/discretionary names with weak pricing power for 1-2 quarters, hedge with XLP or a broad market index: if pass-through remains constrained, margins compress faster than consensus models imply.
• For event-driven exposure, keep capital ready for M&A beneficiaries rather than acquirers: long advisory-heavy financials or transaction tooling names on deal rebound signals over the next 6-12 months, since delayed projects plus ongoing strategic pressure can convert to abrupt catch-up activity.