Good morning. This year will likely be a defining one for how CFOs navigate cost volatility, global economic shifts, and their ripple effects through supply chains—factors that can translate into profit losses.
As we move further into the final quarter of 2025, companies are facing more expenses than many had budgeted for at the start of the year.
Fortune’s Nino Paoli reported on striking new research from S&P Global, which found that corporate expenses are projected to rise by at least $1.2 trillion in 2025 compared with expectations set in January.
So, how did analysts arrive at that figure? S&P Global estimates that global corporate margins have contracted by roughly 64 basis points, representing $907 billion in lost profit among companies covered by sell-side analysts.
According to the report, companies are sacrificing profit margins to absorb rising costs but are also passing part of the burden to customers. Roughly $592 billion of profit loss is being transferred to consumers through higher prices, while about $315 billion is being absorbed internally as lower earnings.
S&P Global’s analysis factors in additional cost pressures: about $155 billion in forecasted expenses from “uncovered public firms” and another $123 billion from private equity and VC-backed companies. Adding these two figures to the initial $907 billion brings total projected 2025 costs to roughly $1.2 trillion.
The study draws on forecasts from over 15,000 analysts tracking 9,000 public firms, representing around $111 trillion of the $130 trillion global equity market, or nearly 85% of its total value.
What it means for CFOs
What does such a massive increase in costs signal for finance chiefs as they plan for 2026? To find out, I asked one of the paper’s authors, Daniel Sandberg, global head of quantitative research and solutions at S&P Global Market Intelligence.
He said the $907 billion profit contraction reflects a broad repricing of costs worldwide.
“Tariffs were one clear surprise that wasn’t baked into forecasts at the start of the year, but they’re not the whole story,” Sandberg explained. “Rising wages, logistics bottlenecks, and higher spending on AI and automation have all contributed to margin pressure.”
For CFOs, Sandberg said: “This underscores the importance of treating 2025 not as an outlier, but as a baseline for what sustained cost volatility looks like. The mix of pressures varies by geography and sector, so the challenge is less about predicting shocks and more about building flexibility into budgets and supply chains to absorb them.”
When asked what surprised him most about the research, Sandberg pointed to the scale of the shift.
“A $900 billion expense shock—visible across models built by 15,000 sell-side analysts—shows just how dramatically market expectations can pivot when policy, inflation, and investment priorities shift at once,” he said.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Ben Eklo was promoted to CFO of Optum, a division of UnitedHeathcare Group, effective Nov. 1. Eklo replaces Roger Connor, who was named CFO of Optum in May, Reuters reported. Eklo is a longtime finance executive at the company. The Optum unit includes the company's pharmacy benefits business, along with a portfolio of in-home care programs and medical clinics, and a unit for technology and data.
Big Deal
KPMG’s Q3 2025 Pulse of Private Equity report provides data, trends, and outlook for private equity dealmaking across major global regions.
The surge was dominated by a handful of large-scale transactions, including the $55 billion take-private of Electronic Arts, led by Silver Lake, Affinity Partners, and Saudi Arabia’s Public Investment Fund, as well as the $28.2 billion acquisition of Air Lease. Investors focused heavily on high-conviction, high-quality assets.
Another key finding: the exit environment strengthened significantly, with the value of private equity exits already surpassing annual totals from the past three years—driven largely by a reopened IPO market and improving valuations, according to KPMG.
Going deeper
In an episode of Wharton's "This Week in Business" podcast, Gad Allon, Wharton professor of operations, information, and decisions, explores the current state of global supply chains and explains how emerging technologies like AI and digital twins are reshaping the way companies prepare for and manage risk in an increasingly volatile world.
Overheard
"Like rookie triathletes, many business leaders treat AI like a sprint—chasing speed, hype, and short-term wins, while expecting long-term, sustainable results. In both racing and business, success hinges on pacing yourself, building stamina, and staying focused on the long game."
—Dennis Woodside, president and CEO of Freshworks and former Google and Dropbox executive, writes in a Fortune opinion piece titled, "I’m a CEO who’s run 18 Ironman races and the AI ROI race isn’t any different."