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BIG TECH'S MOAT MEETS AI'S TIDE: DISRUPTION OR DOMINANCE?

For decades, America's biggest companies have quietly widened the gap on their rivals. Now, artificial intelligence may either wash those advantages away, or deepen them.

Corporate concentration in the United States has climbed steadily for nearly a century, with the largest firms across finance, manufacturing, information and retail expanding, according to Goldman Sachs research.

Their dominance has coincided with a sharp rise in profitability: after‑tax corporate profits have roughly doubled as a share of value added since the late 1980s, the research showed.

"New technologies have enabled a small number of firms to leverage economies of scale and capture larger market shares," said Goldman Sachs analyst Pierfrancesco Mei.

AI now sits at the center of that dynamic. Industries most exposed to the technology, including information services and finance, already show higher concentration and fatter margins, the bank said.

On one hand, AI could lower barriers and intensify competition by eroding incumbents' advantages. On the other, history suggests the opposite: frontier firms may extend their lead as scale, data and network effects kick in.

That tension matters for investors. Since 2000, rising concentration has accounted for roughly one-third of margin expansion across U.S. industries, Goldman estimates.

If history is any guide, the AI race may not level the playing field. It could tilt it further, rewarding the firms that already have the scale, data and capital to move fastest.

(Rashika Singh)

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