“CFOs should go into 2027 expecting sustained higher borrowing costs,” Josh Putnam, EY-Parthenon’s global and Americas corporate finance leader, told me. Financing conditions are also likely to remain volatile, regardless of which party controls Congress.

Growing deficits, strong capital demand, inflation volatility, and policy uncertainty are putting pressure on long-term rates, Putnam said, making disciplined capital allocation, debt management, and investment decisions increasingly important for finance chiefs.

His advice is to stress-test investment hurdles, evaluate debt maturities, and protect balance-sheet flexibility. Companies must understand which investments can generate returns above their cost of capital and redirect resources when they cannot, he said.

Planning for fiscal uncertainty

Political gridlock could add risk, but on its own it does not necessarily mean higher long-term borrowing costs.

A divided government “would not automatically push term premiums higher,” said Gregory Daco, EY-Parthenon’s chief economist. But repeated budget disagreements, shutdown risks, debt ceiling stress, and greater fiscal uncertainty “would reinforce upward pressure,” he said.

Daco recommends testing investments against a range of financing costs and maintaining hurdle rates that reflect a structurally higher and more volatile cost of capital.

For companies, however, the risks extend beyond long-term interest rates. Political uncertainty can also affect access to credit and the cost of short-term financing.

“Markets respond to uncertainty by charging more, whether the risk originates in Washington, D.C., or on Wall Street,” said Mark Williams, a master lecturer in finance at Boston University’s Questrom School of Business and a former bank examiner for the Federal Reserve Bank.

Williams said that banks react to elevated risk by tightening credit terms and reducing lending. “Legislative gridlock can create volatile funding cycles and cause short-term borrowing costs to spike,” he explained. Companies relying on commercial paper, a form of short-term corporate borrowing, should consider longer-term funding, diversify financing sources, and secure credit lines across multiple banks, he said. 

Because a divided government can increase the risk of shutdowns, which can delay the release of economic data, CFOs should also develop internal models to fill those gaps, Williams said. Government contractors, meanwhile, should evaluate how potential payment delays could affect cash flow.

The rising cost of the AI boom

AI investment could face particularly intense financial scrutiny as financing costs rise and regulatory uncertainty increases.

Voters on Tuesday sent a clear message about the AI buildout: the costs of data centers are now a political issue. Candidates in both parties who campaigned on rising electric bills won key races, and at least 14 Ohio towns passed restrictions on data center development, Fortune reported.

The results underscore the growing regulatory and political uncertainty facing AI and data center developers, which could drive up costs and complicate project financing, Williams said. Private credit funds, the primary lenders in the space, would demand higher interest rates, he said, and prices on outstanding AI bonds could fall as yields rise. 

But the market was already recalibrating AI risk before the election, Williams noted. He recommends returning to corporate finance fundamentals, including more conservative net present value assumptions, multi-variable scenario analysis, and stress testing against higher borrowing costs and stricter lending covenants.

Daco also sees a political dimension. With affordability central to the election, “a backlash is likely if households see AI investment raising power costs while its benefits remain concentrated,” he said.

CFOs should prioritize projects with measurable productivity gains, account fully for power and infrastructure costs, and pair technology investment with investment in workers and skills, Daco said.

The financial discipline required to navigate the next economic cycle remains vital. As Putnam put it, “Companies that demonstrate they can put capital to work effectively will be best positioned to pursue growth.”

Sheryl Estrada
Sheryl.Estrada@fortune.com

Leaderboard

Fortune 500 Power Moves

Brandon Sewell was promoted to EVP and CFO of Sysco Corporation (No. 55), effective Nov. 1. Sewell has served as interim CFO since March 2026. He joined Sysco in 2014 and has held a series of finance leadership roles with increasing responsibility across the organization. Before being named interim CFO, Sewell served as SVP and CFO of Sysco’s U.S. business, the company’s largest operating segment. Previously, he led Sysco’s global financial planning and analysis function and held finance leadership roles across the company’s supply chain and merchandising organizations.

The weekly Fortune 500 Power Moves column tracks Fortune 500 company C-suite shifts—see the most recent edition.

More notable moves

Elena Gomez, president and CFO of Toast (NYSE: TOST), has made the decision to step away from her role at the end of the calendar year. Gomez has been at Toast, a restaurant management software and technology company, for five and half years. She led the company through its 2021 IPO and has guided Toast through a transformative period of significant growth and profitability. Toast SVP of Finance Michael Senno will succeed Gomez as the CFO, effective Jan. 1, at which point Gomez will serve in an advisory role as a non-executive employee through July 2, 2027. 

Michael Koch was appointed SVP and CFO of Lindsay Corporation (NYSE: LNN), a global manufacturer of irrigation and infrastructure equipment, effective Nov. 9. Koch succeeds Brett Coburn, VP and chief accounting officer, and Alicia Pfeifer, VP of business finance, who have served as interim co-CFOs since September and will continue in their current roles. Koch brings nearly 30 years of finance experience. He currently serves as SVP of finance and divisional CFO of commercial engine services at StandardAero. Before that, Koch held various finance leadership roles at Universal Electronics, most recently as SVP of finance.

Big Deal

AI-driven job cuts can create costly workforce gaps when companies prioritize headcount reductions over understanding the work needed to execute their strategy, according to Gartner, Inc.

The firm predicts that by 2029, 30% of employees replaced by AI will be rehired—often at a higher cost—if companies fail to overhaul workforce planning. A July survey of 297 chief human resources officers found that only 19% of organizations have effective planning practices that account for changing work, AI’s impact, and business priorities.

Gartner suggests a strategy-first approach: identify critical capabilities, forecast future workloads, assess human and AI capacity, and evaluate workforce investments based on cost, risk, and speed. The main takeaway is that businesses should determine the right combination of people and technology to deliver results, rather than treating AI adoption primarily as an opportunity to cut staff.

Going deeper

Anthropic has pledged $895.4 billion for data centers through 2045, and its suppliers are helping finance the purchases. Fortune's Wen Shao reports that Broadcom has agreed to backstop a $63 billion equipment deal if Anthropic defaults. One expert warns that these deals can spread a single demand shock across multiple balance sheets. Read more.

Overheard

"The reality is, at the end of the day, the American people get to decide where they go as a country."

—Logan Phillips, founder of the election forecasting site Race to the White House, told Fortune in an interview.