KKR mapped which sectors are most at risk of shrinking margins from AI-related disruption & it shows why Semis and Energy are hot themes.

Most likely to have contracting margins:

• Software - no one is surprised here

• Professional services

• Financial Services and Insurance

Least likely to have contracting margins. These are the companies with real-world assets and products.

• Food and beverage

• Utilities

• Semis: no wonder they are flying (least affected + highest growth)

• Technology hardware

• Autos and transportation

• Banks

If a company’s margins are contracting, it’s difficult to model its cash flows. Sectors with potential margin contraction will remain in the doghouse.