Profit Warnings Citing Global Upheaval Hit ‘Record High’
•January 27, 2026
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Companies Mentioned
Why It Matters
The surge in uncertainty‑driven warnings forces investors and executives to reassess earnings forecasts and risk management, potentially reshaping capital allocation across tech and retail.
Key Takeaways
- •42% of warnings cite policy or geopolitical risk
- •Tech sector contributed ~30 warnings, highlighting AI concerns
- •Retail issued 23 warnings, blaming weak demand and taxes
- •EY data shows record high uncertainty‑driven warnings despite lower total
- •Investors may reassess AI investment optimism
Pulse Analysis
The latest EY analysis reveals that 240 UK‑listed firms issued profit warnings in the past year, the lowest total since 2021 but the highest share linked to policy and geopolitical uncertainty. Roughly 42 percent of those statements singled out volatile regulations, tariff disputes and wage hikes as profit‑dragging factors, up from just 12 percent a year earlier. This shift signals that external macro‑risk, rather than ordinary order cancellations, now dominates corporate earnings outlooks, forcing investors to factor political volatility into valuation models. Consequently, boardrooms are revising guidance more frequently to manage stakeholder expectations.
The tech sector accounts for about thirty of the warnings, underscoring growing doubts about the AI‑driven growth narrative that has buoyed both UK and US markets. Industry leaders, including Bill Gates, warn that the surge in AI funding will create a hyper‑competitive landscape where many startups fail to deliver returns. As software firms grapple with rising R&D costs and uncertain regulatory frameworks, analysts are tempering bullish forecasts and urging a more disciplined assessment of AI‑related capital allocation.
Retail companies contributed 23 profit warnings, blaming a combination of tepid consumer spending, a record tax burden and the need to invest in digital and AI capabilities. EY partner Silvia Rindone notes that shoppers are delaying purchases and becoming more selective, widening the gap between digitally agile retailers and those lagging behind. The political fallout may intensify scrutiny of the Labour government’s business agenda, while investors watch for signs that cost pressures and technology adoption will reshape margins across the sector.
Profit warnings citing global upheaval hit ‘record high’
The proportion of profit warnings issued by UK-listed companies where bosses complain about policy uncertainty and geopolitics reached a record high last year, fresh analysis has shown.
New data by EY has shown that 240 firms warned investors that profits would fall short of market expectations.
Though this was the lowest figure since 2021 – when just 203 warnings were recorded – analysts said this represented the highest level of warnings where policy and geopolitical uncertainty were cited, with two in five statements (42 per cent) mentioning the issue as factors reducing profits.
Examples of complaints against both domestic and global policy flip-flopping include the motor finance debacle, tariffs and national living wage increases.
This compared to just 12 per cent of statements referencing uncertainty in 2024 when contract and order cancellations was the biggest driver behind profit warnings.
The data, which is seen as being key to understanding how listed companies are performing across the board and which issues are holding listed companies back, uncovered struggles across the tech sector and retail.
Out of the 240 profit warnings issued by companies, around 30 came from software and computer services.
New figures may rattle some investors who have taken a hawkish view on the AI investment boom that has driven growth across both the UK and US economies, with some City analysts suggesting expenditure may not bring about expected returns.
Microsoft founder Bill Gates is among a number of tech titans to warn that not all tech companies would win out from the surge in investment.
“It’s going to be hyper-competitive,” Gates said.
“A reasonable percentage of those companies won’t be worth that much.”
Retailers flood investors with profit warnings
Another 23 profit warnings came from retail, according to analysis, which could add to criticism of the Labour government over its business policies.
Weak demand among consumers and higher costs through a record tax burden were blamed for the decline in profit expectations across the sector.
EY partner Silvia Rindone said retailers were worried about consumers “delaying their purchases” and becoming “more selective” with items.
“Mixed Christmas trading performances underlined these pressures and divergences,” Rindone said.
“There is also a race to keep pace with rapidly evolving AI and agentic capabilities, which continues to create a widening gap between those able to invest in digital, AI and operational agility, and those struggling to hold their ground amid increasing market share of fast-moving, tech-savvy competitors.”
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