AI-related risks rising for software, media, and services corporates, according to a new report by Fitch Ratings, which warns that artificial intelligence could intensify competition and disrupt business models across key technology sectors.
AI-related risks rising for software, media, and services corporates: Fitch Ratings report
The credit rating agency said that elevated AI-driven risks are particularly concentrated in three segments of the technology, media, and telecommunications (TMT) industry—software, media, and services—where companies rely heavily on intangible assets such as intellectual property, data, and brand value.
In its latest report titled “AI Implications for Corporates Beyond the Hyperscalers,” Fitch said companies operating in asset-light sectors are more vulnerable to disruption as artificial intelligence enables the development of alternative products and services that may be “good enough” substitutes for existing offerings.
The report notes that businesses whose value depends on intangible assets—including software code, proprietary data, and human expertise—may face intensified competition as AI lowers the cost and complexity of product development. As barriers to entry decline, smaller firms and new market entrants could gain the ability to compete with established players at a faster pace.
As a result, sectors such as software development, digital services, and certain segments of the media industry could experience pressure on pricing and profit margins. The potential for rapid innovation powered by AI tools may also accelerate product cycles, forcing companies to continually invest in technology upgrades to remain competitive.
Despite these risks, the report suggests that not all companies within the affected sectors will face the same level of disruption. Firms providing mission-critical services or operating within regulated frameworks may retain stronger competitive positions. Businesses with high switching costs, proprietary data sets, or deep integration into customer systems are likely to demonstrate greater resilience against AI-driven competition.
Financial flexibility will also play an important role in determining how companies navigate the transition. Firms that maintain strong balance sheets and adequate liquidity will be better positioned to invest in artificial intelligence capabilities, fund research and development initiatives, and pursue strategic acquisitions aimed at strengthening technological capabilities.
According to Fitch, maintaining the ability to invest in emerging technologies could be critical for protecting long-term competitive advantages. Companies with sufficient resources may be able to incorporate AI into their products and services, rather than being displaced by it.
The agency noted that the phenomenon described in the report—where AI-related risks rising for software, media, and services corporates—is primarily linked to disruption rather than excessive capital spending. Overinvestment concerns appear to be concentrated mainly among large technology companies that operate hyperscale data centers and cloud infrastructure platforms.
These firms, often referred to as hyperscalers, are investing heavily in data centers, specialized chips, and computing infrastructure required to support large-scale AI workloads. Such investments involve significant capital expenditure, raising concerns among analysts about potential overcapacity if AI demand does not grow as quickly as expected.
However, outside of the largest hyperscale technology companies, Fitch said most corporates are approaching AI investments with caution. The report indicates that overall capital expenditure intensity among Fitch-rated North American corporates—excluding the four largest hyperscalers—is expected to rise only modestly.
Specifically, capital expenditure is projected to reach about 7.4 percent of revenues during 2025–2026, compared with a range of approximately 6.0 to 7.0 percent over the previous five years. This suggests that many companies are prioritizing financial discipline while gradually expanding their AI-related capabilities.
Free cash flow margins for most companies remain healthy, according to the report, indicating that businesses still maintain sufficient financial flexibility despite ongoing investments in technology.
The broader conclusion of the analysis is that artificial intelligence is unlikely to become a dominant credit rating driver across most industries in the near term. Instead, traditional factors such as economic conditions, financial structure, market demand, and operational performance will continue to play a larger role in determining corporate credit profiles.
Fitch reviewed 14 industry sectors as part of its analysis and found that AI adoption across many industries is expected to progress gradually. For most companies, the focus will remain on improving operational efficiency rather than fundamentally reshaping business models in the immediate future.
Nonetheless, the report highlights that the trend of AI-related risks rising for software, media, and services corporates reflects a broader technological shift that could reshape competitive dynamics across the global economy over time.
For industries that rely heavily on digital products and intellectual property, the ability to adapt to AI-driven innovation will likely determine long-term competitiveness. Companies that successfully integrate artificial intelligence into their operations may enhance productivity and create new revenue streams, while those that fail to evolve could face declining market share.
As artificial intelligence continues to develop, credit analysts and investors are expected to closely monitor how companies respond to technological disruption, capital investment requirements, and changing competitive landscapes.
While the full impact of AI remains uncertain, the findings suggest that AI-related risks rising for software, media, and services corporates may become an increasingly important consideration for corporate strategy, investment planning, and long-term credit assessments.