L’Oréal’s CEO is betting on radical innovation in the age of AI

“We have always considered our business model was to bring to market products that are state of the art, charge a bit more, and globalize,” Hieronimus told me. But in the AI era, the “state of the art” bit has taken more of a front seat than ever at the company, which now invests over €1.3 billion per year in research, and even more in technology. 

It’s that mindset that propelled L’Oréal to claim the top spot in Fortune’s inaugural Europe’s Most Innovative Companies ranking, which we published today. In it, Fortune and Statista ranked Europe’s 300 most innovative companies, considering product and process, as well as innovation culture. 

The real driver of L’Oréal’s innovation, Hieronimus stressed, is technology. “Technology is an augmentor upstream for research but also downstream for the consumer,” he said. Upstream, AI now allows the company to scan hundreds of new molecules per year, whereas in the past it took months to do one. 

“It’s a fantastic opportunity,” he said. “Our labs are powered by AI. It is an advantage. We have 16 terabytes of proprietary data on beauty. We use AI in research to scan new molecules, using digital twins.” 

The commercial result, Hieronimus said, is that “[AI] allows us to reformulate faster, but also to come up with new products.” He pointed to the new Laroche Posay Mela B3 anti-dark spot serum containing one such new molecule, Melasyl, as one such example. 

Downstream, the use of agentic generative AI is also starting to yield results, Hieronimus said. After experimenting with virtual try-outs and other tech-enabled online offerings, L’Oréal last year launched its L’Oréal Paris Beauty Genius, an AI agent that advises consumers on their purchases. 

More than 100,000 consumers already use the Beauty Genius, Hieronimus said, leading to benefits for both consumers and the company. “If you recommend the right product, [your consumers] remain loyal,” he said. These loyalists, the company finds, purchase up to eightfold the amount of L’Oréal products another consumer would. Other Fortune Global 500 companies that made it to the top 10 of our Most Innovative Companies list include aircraft engine maker Rolls-Royce (No. 3), pharma giants GSK (No. 5), Sanofi (No. 6), and Novo Nordisk (No. 7), and Europe’s largest tech company, SAP (No. 9). You can find the full list here.

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

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The markets

• S&P 500 futures moved down 0.4% before the opening bell this morning, but are still priced (barely) above the 6,000 mark. The S&P 500 fell 0.3% yesterday. The index is up 2.4% YTD. Globally, investors were largely negative: All the major Asian indexes were down, save for Shanghai (which was flat). The Stoxx Europe 600 was down 0.6% in early trading, while other European markets were down to flat.

From the analysts 

• UBS on the CPI: “Yesterday’s US consumer price inflation data showed, as expected, faint hints at the effects of trade taxes and clearer examples of weak demand. The declining number of people wishing to visit the US helped weaken air fares. Goods where inventory is held for longer (like autos) avoided tariff effects for now. Imported goods with shorter inventory times—like bananas—saw price surges. Large consumer appliances had the second largest price increase on record. Producer price data may show more tariff price effects, as these goods sit closer to the point of import in the supply chain,” per Paul Donovan.
• BofA on Fed cuts: “The benign May CPI print trims the tails of the Fed policy path distribution. Combined with the solid May jobs report, the CPI data reduce the chances of a nasty bout of stagflation. That means a lower risk of ‘bad’ cuts (due to a collapse in the labor market) but increased probability of ‘good’ cuts (solid labor market and slowing inflation). Since we expect to see the impact from tariffs more clearly in coming months, we remain comfortable with our Fed call: on hold this year and 100bp of ‘good’cuts next year,” per Stephen Juneau et al.
• Deutsche Bank on Mideast tensions: “There were a few creaking joints in markets yesterday, as growing tensions in the Middle East saw Brent crude oil prices (+4.34%) post their biggest daily jump of 2025 so far, moving up to $69.77/bbl. That came as the US said they were pulling some staff from their Baghdad embassy, with fears mounting about an escalation between the US and Iran. Sentiment wasn’t helped by various headlines, and CBS News reported that part of the reason for the US moving staff out of the Middle East was because US officials had been told that Israel was ready to launch an operation into Iran. The move also followed comments that President Trump made to the New York Post he was ‘less confident’ about getting Iran to agree to end its nuclear program, and Iran’s defence minister warned that Tehran would target US bases if ‘conflict is imposed on us.’ So after a strong start to the session, those headlines saw the S&P 500 (-0.27%) lose ground by the close, with futures this morning down another -0.34%,” per Jim Reid.

Around the watercooler

There’s a trick to driving AI adoption among employees, says TIAA exec, and it’s a ‘big lever’ by Steve Mollman

Starbucks’ new game plan to roll out AI chatbots at cafés could serve as a ‘litmus test’ for the industry, analyst says by Sasha Rogelberg

Google is offering buyouts and tightening its RTO policy—only problem is, it’s already worried about losing top performers by Eleanor Pringle

Tesla bulls have been waiting years for this day: Elon Musk finally reveals date for his robotaxi pilot launch by Christiaan Hetzner

CEO Daily is compiled and edited by Joey Abrams and Ian Mount.