The Impact of AI Disruption on Business Moats

The explosion of AI innovation is rewriting the rules of competition—but not uniformly. Our analysts re-evaluated 132 companies that are most susceptible to AI disruption, uncovering both risks and opportunities. 

After an extensive review, we view AI as a sorting mechanism instead of a universal destroyer of moats. Among our framework, network effects prove resilient as companies who benefit from strong networks like cybersecurity and travel platforms fared best. Switching costs face uncertainty as AI threatens certain moats, particularly in enterprise software and IT services. Despite these pressures, recent market corrections present undervalued opportunities for investors confident in specific sectors. 

What sectors face the biggest threats from AI?

In our analysis, we determine the industries where wide moat “winners” are present, and where narrow moats need future consideration on long-term growth outlooks. In design software and cybersecurity industries, proprietary data will likely thrive. In software solutions, increasing automation allows for shifts in scaling intelligent workflows.

Download our report to learn more on the intersection of Morningstar’s moat analysis and AI advancements.