Morgan Stanley analyst says: AI will not kill software companies, it will ...

AI will not destroy the software companies, but it will change how the industry works, David Chen, a senior executive at Morgan Stanley said. Speaking during discussions around the bank’s annual technology conference (via CNBC), David Chen said AI is likely to reorganise the software sector rather than eliminate it. “AI doesn’t kill software. It’s reshuffling it,” he said. During the discussion, Chen said that the conversation around AI has changed over the past year. He stated that investors are now asking a different question about AI: whether companies will benefit from the technology or face disruption.


Many companies till last year focused on using AI tools to reduce costs and improve efficiency. Businesses talked about automation and AI assistants that could lower operating expenses.



Chen said those discussions are now considered basic expectations. Instead, investors want to know whether companies will benefit from AI or whether the technology could threaten their business models.

Some software companies face greater risk

David Chen noted that many software companies are already facing pressure as AI poses new challenges to the industry. He said that the impact of AI will vary depending on the type of software company. Some enterprise software companies have seen large declines in market value this year.


He said company boards are also changing the type of leaders they prefer. In many cases, boards are now looking for CEOs with strong product and technical backgrounds rather than executives focused mainly on sales and marketing.


This shift reflects the need for companies to rebuild their products to work with AI systems.

AI spending and future industry outlook

Chen said investment in AI infrastructure may remain strong over the next few years, although spending could stabilise after the current wave of expansion.


He also pointed to cybersecurity as one part of the technology sector likely to benefit from AI adoption. According to Chen, the overall message from the conference was that AI is no longer seen as a future possibility but as a technology already reshaping the industry.