Transformative AI is "[...] AI that precipitates a transition comparable to (or more significant than) the agricultural or industrial revolution." The concept refers to the large effects of AI systems on our well-being, the global economy, state power, international security, etc. and not to specific capabilities that AI might have (unlike the related terms Superintelligent AI and Artificial General Intelligence).
Holden Karnofsky gives a more detailed definition in another OpenPhil 2016 post:
[...] Transformative AI is anything that fits one or more of the following descriptions (emphasis original):