This year’s Morgan Stanley Tech, Media and Telecom conference lineup was stacked: Dario Amodei and Sam Altman (both in the middle of the Pentagon drama) Jensen Huang, Satya Nadella, and dozens of enterprise software CEOs trying to convince investors they’ll survive the AI reckoning.
I spent a day on the ground covering it, and then sat down with David Chen, Morgan Stanley’s head of global technology investment banking, to unpack what he heard.
Chen said the biggest change from last year was the nature of the questions. In 2025, companies were talking about using artificial intelligence to trim expenses, like shaving a few points off operating costs with copilots and automation tools. Chen said that’s now table stakes.
“I don’t think investors really wanted to hear about how people are being more efficient with AI,” he told us. “They really, really wanted to hear, are you a beneficiary, or does AI threaten your overall business?”
And to their credit, companies were more direct about answering that question this year. Particularly the enterprise software companies, which have watched a trillion dollars in market cap evaporate in just a week this year.
Chen drew a line between companies whose software does something deterministic, like calculating payroll, sending invoices, things where being wrong by 2% is a real problem, and companies that are essentially organizing public data and putting it behind a nice interface.
The former, he argued, still has a moat. The latter is in serious trouble.
“AI doesn’t kill software,” Chen said. “It’s reshuffling it.”
But he didn’t sugarcoat it either. For the companies on the wrong side of that line, he called it “wartime, not peacetime.” And he made an interesting observation about leadership: in this environment, boards are starting to prefer product-oriented CEOs over sales-and-marketing types. If you need to reinvent the back-end of your company to be AI-native, you want someone who understands the architecture, not just the pipeline.
CNBC producer Jasmine Wu coined a phrase that captures the shift nicely: we’ve moved from SaaS (software as a service) to SaaaS (software for agents as a service). It’s an idea that came from my conversation with Box CEO Aaron Levie earlier in the week. He told me agents are now his new customer base, and he could see that business becoming 10 times bigger than the existing one. The implication is huge: the software that survives won’t be the software humans use. It’ll be the software agents use.
On the AI buildout, Chen was asked whether infrastructure spending would be higher or lower in 2027. His answer was telling: “Probably a similar level.”
If that’s the case, the AI capex cycle, at least from the hyperscalers, may be approaching its peak.
For the year ahead, Chen is predicting a rebalancing of winners and losers in enterprise software, with cybersecurity standing out as a segment that has all the right competitive moat characteristics and is a clear AI beneficiary rather than a victim.
He also flagged a wave of next-generation companies in semiconductors and systems that are focused on solving the bottlenecks in connectivity, compute, and energy that are constraining the AI buildout.
The throughline from the whole week: AI has moved from the idea that this will be big to the realization that this is already big, so show me you’re embracing it.
