Banking giant Morgan Stanley warns that companies failing to adapt to AI risk being wiped out as competitors adopt the technology to drive productivity gains and boost revenue.
In a new CNBC interview, Morgan Stanley senior portfolio manager Sherry Paul says the distinction between tech companies and non-tech companies no longer exists, and that businesses that fail to internalize the shift are heading toward what she described as “extinction events.”
“And my biggest thesis I’m teasing out about that is whether they realize it or not, every company is now a tech company. And if you don’t understand that and realize that and understand what the application to AI is going to be in your business model, then you’re going to be facing what I’m explaining to clients as the Blockbuster event.”
Blockbuster, once the dominant movie rental chain, filed for bankruptcy in 2010 due to its failure to adapt to streaming, relying on late fees and massive debt. In 2000, it declined the opportunity to acquire Netflix.
Paul says healthcare is a prime example of where AI-driven productivity gains could dramatically reshape margins, workflows and outcomes. But she notes that the same logic applies broadly across industries.
“These extinction events, because the race is now moving so quickly that if you don’t start to model out yourself and understanding that every company is a tech company, who’s going to advance in productivity, cost cutting and advancement, like in particular healthcare… it leaves a lot of room for profits to improve across the spectrum.”
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