Credit rating firm Egan-Jones released a report on October 1 identifying professional services, venture capital, and the housing market as the primary sectors facing AI-driven disruption. The firm suggests that the shift in professional services is already visible, citing a 14% reduction in audit fees for KPMG, which dropped from $416,000 to $357,000.
The report highlights volatility in the tech sector, noting that IBM shares experienced a 13% decline on February 23. While some analysts remain cautious, others like Evercore ISI maintained an Outperform rating, citing IBM's internal modernization tools. Additionally, the firm Anthropic claims its Claude Code tool can accelerate the modernization of COBOL banking systems.
Regarding venture capital, Egan-Jones argues that startups requiring less capital will reduce the leverage and returns for venture firms. The firm believes that many limited partners have not yet accounted for this shift in their valuations. The report also suggests that job losses in AI-exposed sectors reached an average of 11,000 per month during the second quarter.
In the housing market, the firm warns that job losses could trigger property sales within 6 to 12 months. US home prices rose 1.9% in the year to July, trailing the 3.4% inflation rate, marking 14 consecutive months of decline in real value. Furthermore, Redfin data indicates a record surplus, with sellers outnumbering buyers by 57.9% in August.
