Middle market companies are continuing to invest despite a cautious U.S. economic outlook, with 77% of executives rating their own company’s financial prospects as excellent or very good, according to KeyBank’s Q2 2026 Middle Market Sentiment Report. The survey points to a notable shift in enterprise priorities: AI, workforce development and cybersecurity are increasingly being treated as long-term growth infrastructure rather than discretionary technology spending.

Economic uncertainty has not convinced middle market companies to put their growth plans on hold. Instead, many are concentrating capital on capabilities they can control, particularly artificial intelligence, technology infrastructure and talent.

That is the central finding from the latest KeyBank Middle Market Sentiment Report, which shows a widening gap between how executives view their own businesses and the broader U.S. economy.

For the second consecutive survey, 77% of middle market executives rated their company’s financial outlook as excellent or very good. By comparison, only 51% expressed the same level of confidence in the U.S. economy.

That 26-percentage-point difference is up from 19 points a year earlier, suggesting that executives increasingly see company-specific investments as a way to navigate macroeconomic volatility.

“The defining characteristic of today’s middle market isn’t simply confidence—it’s resilience,” said Ken Gavrity, president of Key Commercial Bank.

The distinction matters for technology vendors and enterprise leaders. Rather than waiting for interest rates, consumer demand or other macroeconomic variables to become more predictable, companies are allocating resources toward areas that can improve productivity, operational efficiency and competitiveness.

AI spending moves toward execution

AI is perhaps the clearest example.

Fifty-four percent of middle market companies identified AI and technology expansion as their top capital investment priority for 2026.

That represents an evolution in how businesses are approaching artificial intelligence. Earlier conversations around enterprise AI frequently centered on cybersecurity, fraud prevention and experimentation. The latest survey suggests the technology is increasingly being evaluated as an operating capability.

For middle market organizations, that can mean using AI to automate repetitive processes, improve forecasting, support decision-making, analyze large datasets or augment employees rather than pursuing AI simply as a technology experiment.

The shift mirrors what larger enterprises are doing across the technology ecosystem. Microsoft, Google, Amazon and Salesforce are embedding generative AI into enterprise software, while NVIDIA continues to provide much of the computing infrastructure underpinning the AI expansion.

But access to AI tools is only part of the equation.

Talent becomes the other side of the AI investment

KeyBank’s findings indicate that companies are also investing in the workforce needed to turn AI spending into measurable business outcomes.

Reskilling existing employees and hiring workers with AI expertise are becoming increasingly important workforce priorities. That creates a direct connection between technology budgets and HR strategy.

For middle market companies, this may be particularly consequential. They often lack the massive technology and data-science organizations available to the largest corporations, making workforce development a potentially important lever for AI adoption.

The implication for HR and technology leaders is straightforward: buying an AI platform does not automatically create productivity gains. Organizations need employees who understand how to use the technology, managers who can redesign workflows around it and governance structures capable of controlling risk.

This is pushing AI adoption, workforce development and HR technology closer together.

Cybersecurity remains foundational

The enthusiasm around AI has not displaced cybersecurity.

KeyBank reports that cybersecurity remains a consistent investment priority regardless of a company’s broader economic outlook. That is significant because AI adoption can expand an organization’s attack surface while increasing the volume and value of data flowing through enterprise systems.

For companies moving from AI pilots to production deployments, cybersecurity therefore becomes part of the AI investment equation rather than a separate IT initiative.

The same principle applies to workforce technology. Cloud HR platforms, payroll systems, employee analytics and AI-powered workplace applications increasingly handle sensitive organizational and personal information.

M&A could regain momentum

The survey also points to continued appetite for mergers and acquisitions, although companies appear more measured about timing.

Buy-side M&A activity is expected to strengthen through 2027 and 2028, particularly among technology companies, larger organizations and businesses whose CEOs or CFOs are actively pursuing acquisition strategies.

That outlook could create another source of demand for enterprise technology.

Acquirers need systems capable of integrating employees, data, cybersecurity controls, finance operations and technology infrastructure after a transaction closes. AI is also increasingly becoming part of M&A due diligence as companies evaluate the technology capabilities and data assets of potential targets.

Manufacturing joins technology as a growth leader

Technology is not the only optimistic sector. Manufacturing has joined technology as one of the most optimistic industries for growth, according to the survey.

That combination is noteworthy because manufacturing is increasingly becoming a major enterprise technology market. Industrial AI, predictive maintenance, robotics, supply-chain analytics and connected-factory systems are bringing software and physical operations closer together.

For technology suppliers, the middle market may therefore represent an increasingly attractive customer segment—not simply because companies are spending, but because they are investing in operational transformation.

What it means for enterprise teams

The report points to a broader change in corporate spending behavior.

Companies are not necessarily responding to uncertainty with across-the-board cost cutting. Instead, they appear to be separating investments that create long-term capabilities from expenditures that can be deferred.

AI, cybersecurity and workforce development increasingly fall into the first category.

For CIOs and CTOs, that means demonstrating measurable business value from AI initiatives will become more important as experimentation gives way to execution. For CHROs, it means workforce planning and reskilling will increasingly need to be integrated with technology strategy.

And for CFOs, the continued M&A outlook suggests that technology investments made today may also determine how easily companies can integrate future acquisitions.

The broader message is less about optimism than control. Middle market executives may not know when economic conditions will stabilize, but the KeyBank survey suggests many believe they can still influence their companies’ long-term trajectory through targeted investments in technology, people and operational resilience.

Market Landscape

The middle market is becoming an important battleground for enterprise technology vendors as AI moves beyond proof-of-concept projects.

The 54% investment priority for AI and technology expansion suggests that adoption is increasingly tied to business transformation rather than isolated experimentation. That creates opportunities across AI software, cloud infrastructure, cybersecurity, workforce analytics and automation.

The talent component is equally important. AI adoption is creating demand for reskilling, AI-skilled hiring and employee productivity platforms, connecting technology investment directly to HR strategy.

The M&A outlook adds another layer. Companies preparing for acquisitions will need scalable technology infrastructure, interoperable data systems and cybersecurity controls that can support integration.

For vendors, the opportunity is therefore broader than selling AI models. The next phase of enterprise AI adoption will require the surrounding infrastructure, workforce capabilities and governance needed to operationalize those models.

Top Insights

• KeyBank found 77% of executives remain highly confident in their companies, creating room for AI, technology and workforce investments despite economic uncertainty.
• AI and technology expansion ranked first among 54% of companies’ 2026 capital priorities, signaling movement from experimentation toward measurable enterprise execution.
• Middle market companies are pairing AI spending with employee reskilling and AI hiring, making workforce capability a critical factor in technology returns.
• Cybersecurity remains a core investment regardless of economic outlook, reflecting the security requirements created by expanding AI and digital infrastructure.
• M&A expectations strengthen through 2027 and 2028, particularly among technology-focused and larger companies pursuing acquisition-led growth strategies.

Join thousands of HR leaders who rely on HRTechEdge for the latest in workforce technology, AI-driven HR solutions, and strategic insights