Backdrop: The modern private credit industry opened for business after the global financial crisis, as all types of caps and limits were slapped on banks. Private credit firms emerged, and initially funded loans to businesses that weren’t able to access financing, but these higher interest rates ended up being highly attractive to many investors. As funds piled in from institutions, private equity firms like Blackstone (BX) and Apollo (APO) set up their own credit shops. Lending expanded to larger companies to fund everything from data centers to AI startups, and the products were eventually marketed to the retail crowd.

Eye on the shadows: As long as defaults are low, private credit can be a lucrative investment, with double-digit returns on lending. The problem is that there is not much insight into how the entire market is leveraged and how much risk is being taken on to underwrite new loans and capital. If things also go south in a sector that is highly funded by private credit, like an AI disruption to software companies, it can also have knock-on effects on the entire system. Apollo aims to mark private credit daily, eventually

Red flags first appeared in the fall after auto parts maker First Brands and subprime auto lender Tricolor Holdings went bankrupt. Things escalated last month, as redemption requests spiraled at direct lender Blue Owl (OWL), while BlackRock (BLK) later curbed withdrawals from one of its largest private credit funds. Now, JPMorgan (JPM) is reportedly marking down loan portfolios of private credit groups, and Morgan Stanley (MS) and Cliffwater have restricted redemptions at their multibillion-dollar private credit funds. Cliffwater gets redemption requests totaling 14%

Moment of reckoning? “Liquidity never matters until it matters” is the famous investing maxim, and so far, there has only been redemption pressure, not a full-blown private credit crisis. While banks have largely moved away from direct riskier lending, they do finance private credit firms indirectly in the form of business loans. As of now, it looks like broader panic has been contained, though there can be significant losses in the sector, as there are in any credit cycle.

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Last month, Blue Owl Capital (OWL) said that it will no longer allow regular quarterly withdrawals from Blue Owl Capital Corporation II (OBDC II), which targets retail investors.

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Shares of Morgan Stanley (MS) have risen about 38% in the past 12 months.

The layoffs are affecting employees across the bank’s three main business units: investment banking and trading, wealth management and investment management. The reductions reflect a combination of evolving business priorities, geographic adjustments and individual performance considerations. The cuts are taking place in both the U.S. and international offices.

Many of the job reductions occurred Wednesday, though the process began last week, the Journal reported. Morgan Stanley has conducted several rounds of staff reductions in recent years.

Within the wealth-management unit, the layoffs include private bankers and certain operational roles. Some affected employees were involved in providing mortgages and related lending services to wealthy clients.

The staffing changes come after a strong financial year for the firm. Morgan Stanley (MS), which employs roughly 83,000 people, reported record annual revenue in 2025 from its investment banking and trading business as well as from its wealth-management division.

Industrywide, large financial institutions experienced one of their strongest years in 2025, fueled by a rebound in corporate dealmaking, active trading during volatile markets and continued spending by wealthy clients.

Morgan Stanley’s (MS) wealth-management unit, which typically generates close to half of the firm’s overall revenue, reported a 13% increase in revenue in the fourth quarter.

The layoffs also come amid a broader wave of white-collar job cuts across corporate America. Many companies have pointed to productivity gains from artificial intelligence as a factor behind workforce reductions.

Last month, Jack Dorsey said Block (XYZ) would cut about 40% of its workforce, more than 4,000 employees, arguing that rapidly improving AI systems are enabling the company to operate with fewer staff. Some analysts have questioned that explanation, suggesting the move may primarily reflect an effort to reduce costs at an organization seen as overstaffed.

Other technology companies have also cited AI as part of restructuring efforts. Salesforce (CRM) eliminated roughly 4,000 customer-support roles last year, while Pinterest (PINS) has said it plans to cut nearly 15% of its workforce as it reallocates resources toward AI-related positions.

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EquityZen is a private shares platform that was acquired by MS in January 2026.

The buy- and sell-side fees have

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Seeking Alpha analysts Dr. Christopher Davis of Quad 7 Capital, Labutes IR, and Daniel Jones weigh in.

Christopher Davis: Make no mistake, the AI disruption fears seem to be hitting sector by sector. And there is some risk to financials and related stocks. The shift toward advanced automation is creating a significant issue where established players are finding their traditional moats narrowing. At least that is the thought, and stocks in the space are starting to get hit.

Perhaps one of the most vulnerable areas is the wealth management space, where firms like Charles Schwab (SCHW) and Raymond James (RJF), for example, are at risk with the rise of sophisticated advisory AI tools.

The threat is simple to understand. These AI systems can now handle complex tasks such as tax-loss harvesting and estate planning that were once the exclusive domain of high-priced human advisors. So, as these tools become more accessible, the whole fee-based revenue model that these institutions rely heavily on is now facing intense pressure, potentially leading to a long-term decline in profit margins as customers opt for cheaper, more efficient digital alternatives.

The goal for companies is to learn how to embrace and incorporate AI to prevent being disrupted and/or replaced. The market has already started to discount these names.

We would also add that the insurance brokerage industry is at risk as AI assessment algorithms are being developed. Insurance companies have always fed data into a machine to generate quotes, but the thought here is that companies that act as intermediaries are seeing their value proposition questioned as AI-driven comparison engines now allow consumers and businesses to find the best rates across multiple carriers instantly.

Because AI is faster and can now match risk to rate with higher precision and speed, the human element of the transaction is becoming a luxury rather than a necessity, putting downward pressure on the stock prices of firms that haven’t transitioned to a tech-first model. Some names at risk include Marsh McLennan (MRSH), Aon (AON), Arthur J. Gallagher (AJG), and Willis Towers Watson (WTW).

All of this assumes that significant lobbying won’t take place for regulations to prevent or offset this, but as it stands now, these are a few prime examples. There are many more.

Labutes IR: While AI can be positive for the financial sector as a whole due to improving efficiency over the long term, it can also disrupt companies that have business models based on high fees, are labor-intensive, and can be automated.

One area where I think AI could have a significant disruptive impact within the financial sector is related to wealth and asset management, especially concerning financial advisory and tax planning services, where AI tools can perform tasks much more rapidly and efficiently. This is likely to put pressure on pricing across the industry and on business margins in the near future, being a potential headwind for companies such as Charles Schwab (SCHW), Raymond James Financial (RJF), Morgan Stanley (MS), and Julius Baer (JBAXY) in Europe.

Daniel Jones: Just as there will be winners in the financial space, there will also be losers. The companies most exposed will be those that have little to no proprietary data and those that operate generic business services.

In the former category, you’re looking at companies that deal a lot with publicly available data. Although these companies do have proprietary data as well, the fact that a lot of their business is centered around data that is abundantly available but just historically difficult to aggregate is problematic. This helps to explain why companies like Nasdaq (NDAQ) and S&P Global (SPGI) have been down so much in recent months.

Small banks will also be challenged because AI makes digital banking more tempting and competitive. These enterprises also lack the resources necessary to effectively compete in a market that will be increasingly dominated by businesses with tremendous financial resources.

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The banking giant’s asset management arm has approached investors on the plan, according to the people, who asked not to be identified because the conversations are private.

The assets planned to be moved include Omega Hospitals, where MS took a minority ownership in 2024, and RG Scientific, where the New York-based financial services provider bought a controlling stake the same year, Bloomberg reported on Friday.

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The banker, who has been a close adviser of Elon Musk, is returning to Wall Street as investment banks jockey for a piece of SpaceX’s (SPACE) initial public offering. The deal, poised to be the world’s largest IPO, is set to produce massive fees for banks.

“We have asked Michael to bring his expertise to the full banking and [institutional securities group] franchise, particularly as technology transforms productivity and impacts global industrial policy,” Morgan Stanley executives wrote in a memo to employees, according to the Financial Times.

For the past year, Grimes worked as an adviser in the U.S. Commerce Department and headed the government’s investment unit. He essentially acted as an in-house dealmaker for the administration, which has acquired several stakes in strategic companies, including chipmaker Intel (INTC) and minerals producer USA Rare Earth (USAR), the FT reported.

At Morgan Stanley, he played important roles in leading some of the biggest tech IPOs, including Facebook and Airbnb. He also helped advise Musk on financing his $44B acquisition of Twitter, since renamed X.

Grimes gained fame in Wall Street lore as the investment banker who became an Uber driver to help Morgan Stanley (MS) win a prime role in the rideshare company’s IPO in 2019.

Morgan Stanley stock rose 0.6% in Tuesday morning trading. The company didn’t immediately respond to Seeking Alpha’s request for comment.

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Goldman Sachs (GS) saw heavy insider selling in mid-January, as Director David A. Viniar executed multiple transactions on January 16, unloading shares across three sales at prices ranging from about $964 to $971. In total, Viniar sold roughly 68,000 shares for more than $65M, though he continues to hold a substantial stake in the firm, with post-transaction holdings exceeding 750,000 shares.

Morgan Stanley (MS) insiders executed a wave of coordinated selling on January 20, with multiple senior executives—including the CFO, Co-President, and Chief Risk Officer—reducing their holdings at prices clustered around the mid-$180s. In aggregate, more than 104,000 shares were sold for roughly $19M, while all executives involved continue to hold meaningful stakes in the firm.

Argan (AGX) insiders reported sizeable stock sales in mid-January, with Director Cynthia Flanders selling 19,000 shares on January 21 at an average price of $386.70, totaling about $7.3M in proceeds. Director William F. Leimkuhler also reduced his position, selling just over 11,000 shares on January 16 at roughly $379 per share for about $4.2M, while both directors continue to hold meaningful stakes in the company.

GameStop (GME) disclosed aggressive insider buying this week, as President, CEO, and Chairman Ryan Cohen added 1 million shares across two purchases on January 20–21 at prices around $21 per share. The buys totaled roughly $21.4 million, lifting Cohen’s stake to more than 38.3 million shares and underscoring a strong vote of confidence from the company’s top executive.

Under Armour (UAA) saw substantial insider accumulation last week, as 10% owner Prem Watsa and related entities purchased shares across three consecutive sessions at prices between $5.60 and $5.89. In total, nearly 8.6 million shares were acquired for roughly $49.7 million, boosting the group’s ownership to just over 18 million shares and signaling strong conviction at current price levels.

Ally Financial (ALLY) disclosed insider buying late in the week, with CEO Michael George Rhodes purchasing 23,800 shares on January 23 at an average price of $41.68. The transaction totaled just under $1M and increased Rhodes’ holdings to 49,434 shares.

Mission Produce (AVO) attracted sustained insider buying over three consecutive sessions, as 10% owner Globalharvest Holdings Venture steadily added to its stake between January 15 and January 20 at prices ranging from $11.76 to $12.50. In total, more than 1.6 million shares were purchased for roughly $19.4M, lifting Globalharvest’s ownership to about 9.46M shares.

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