KPMG Survey: Optimism Meets Execution as LA Business Leaders Scale AI and Position their Companies for 2026 Growth

NEW YORK – Los Angeles business executives are entering 2026 with renewed confidence and clear plans to strengthen growth. Leaders are advancing talent and technology strategies, expanding their operational footprint, and accelerating AI adoption while reinforcing the governance and risk controls needed for resilient performance, according to a new study released today by KPMG LLP, the U.S. audit, tax, and advisory firm.

The KPMG 2026 Markets Survey: Local Insights from Los Angeles shows strong confidence among city business leaders, with organizations preparing for growth by expanding teams, commercial real estate footprints, and deal pipelines. Executives are taking a more intentional approach to investment, signaling a year of selective expansion supported by talent strategy, portfolio moves, and operational planning.

“Los Angeles is entering 2026 with real momentum,” said Michelle Wroan, KPMG Los Angeles Managing Partner. “Leaders are investing in their people and reshaping how work gets done, while applying the governance and skills needed to ensure innovation is responsible and growth is sustainable.”

The KPMG 2026 Markets Survey: Local Insights from Los Angeles report surveyed 107 business leaders (94% C-Suite; all VP-level and above) at companies with annual revenues of more than $50 million on the key challenges and opportunities in driving business growth in the city. Key findings are highlighted below.

Business leaders’ confidence is translating into plans to expand teams, add commercial real estate space, and pursue selective M&A as they position their businesses for the year ahead.

WROAN: “What we’re seeing in Los Angeles is confidence backed by intention. Leaders are making strategic choices about talent, office space, and deal activity that align with their long‑term vision – not just the moment. It’s a more disciplined, forward‑looking approach to growth.”

• 96% of leaders are confident in the growth of their company and their industry. In addition, 85% of leaders are confident in the city’s business growth in 2026.
• 71% expect to increase employee headcount in 2026 (55% modest; 16% significant).
• 46% anticipate high‑impact acquisitions; 36% plan moderate dealmaking; 11% are seeking to be acquired.
• Almost half, 49%, expect to complete deals in the first half of 2026, and 39% expect to close in the second half of the year.

Companies are converting market uncertainty into disciplined, margin‑focused growth. Demand remains resilient, and leaders expect margin expansion driven by pricing agility, stronger supply‑chain continuity, and the city’s infrastructure advantages.

WROAN: “Los Angeles leaders aren’t waiting for stability—they’re building it. What stands out this year is how companies are using uncertainty to sharpen execution: strengthening margin discipline, tightening operating models, and investing in capabilities that make growth more predictable. That mindset is what turns momentum into performance.”

• Tariffs have not uniformly dampened demand. Instead, nearly two-thirds (62%) of business leaders reported sales increases, and seven in ten (72%) expect margin expansion in 2026.
• Almost a quarter (24%) cited geopolitical instability, including tariffs, as a top threat to growth, underscoring why firms are pairing expansion with risk controls.
• In response to future uncertainty, 36% said they are increasing investment in supply-chain resilience and continuity, including 79% who said they will invest in integrating AI for risk mitigation and productivity.

AI adoption in Los Angeles is shifting from experimentation to industrialization, with organizations embedding AI across workflows, talent systems, and decision‑making. Leaders are prioritizing responsible use, skills, and governance as AI becomes a core productivity driver.

WROAN: “Leaders are modernizing work by upskilling teams and building the guardrails needed to use AI with confidence. It’s a thoughtful, capability‑led approach that positions LA companies to capture real productivity gains.”

• Almost all (98%) business leaders surveyed say their organization’s use of AI will increase in 2026, including more than half (54%) who said their use of AI will increase significantly. 92% agree that AI will be a top investment priority in 2026.
• A majority (93%) are using AI tools in candidate screening and selection, and 87% are revising job descriptions to include AI-related competencies.
• 91% said they expect employees outside of tech roles to manage multiple AI agents as part of their role in 2026, and 92% said they believe agentic AI will transform operating models and workforce management.
• 84% of leaders surveyed in Los Angeles said business teams, not HR or IT, will manage AI agents’ performance, signaling the need for enterprise-wide governance.
• Almost three‑quarters (74%) of leaders anticipate workforce reductions as AI scales, and more than half (57%) agree entry‑level hiring will decrease because of AI.

LA companies are redesigning their commercial real estate strategies for flexibility and scale, expanding their footprint while shifting to a distributed model that supports talent proximity, client access, and collaboration.

WROAN: “Los Angeles leaders are treating their real estate footprint as a strategic asset again. Companies are designing spaces that accelerate decision‑making, deepen client engagement, and give teams more optionality. It’s a more agile model that reflects how and where work now happens.”

• 65% of business leaders plan to increase their commercial real estate footprint in 2026, and 27% expect to remain the same.
• Nearly half (42%) are designing a distributed footprint and plan to open hybrid office hubs across Southern California.
• 19% plan to expand in downtown LA, 18% on the Westside, and others across the Inland Empire (7%), Orange County (5%), and Burbank/Valley (2%).
• 83% of leaders say LA’s infrastructure — including transportation, utilities, and digital capacity — provides a competitive advantage, with 59% calling it a significant one.

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