The Great Competition Wars Have Begun | PitchBook AI Outlook

What's New

PitchBook's 2026 Artificial Intelligence Outlook declares the start of "The Great Competition Wars," identifying sectors where AI will generate outsized returns and others where overheating will destroy value. Winners will pursue network effects, unique data moats, exceptional design, and creative distribution strategies—while undifferentiated startups face "disproportionate value destruction."

Why It Matters

We are in the early stages of a 50-year technological revolution. The infrastructure build-out is approaching $1 trillion annually, but the real story is the rapid creation of unicorns—and destruction of incumbents—enabled by low-cost AI tools. Traditional industries like big-budget gaming, legacy ERP, and truck driving face existential threats from AI-native upstarts.

Big Picture Drivers

• Healthcare transformation: AI could double clinical trial success rates (from ~8% to ~18%) by improving Phase I success rates from ~52% to ~80%; AI-native biotechs show 80-90% Phase I success versus industry average of 40-65%

• Enterprise disruption: Foundation models, agentic commerce tools, and AI-focused data management will dominate; industry-specific customer service specialists will create moats

• Deep tech opportunities: Autonomous maritime systems are now essential following drone use in Russia-Ukraine; datacenter electricity/decarbonization offers faster and cheaper deployment than nuclear

• Consumer revolution: World models in gaming enable instant creation of new worlds and experiences

• Tech-enabled services risk: Companies will be "fully outcompeted" by AI-native competitors if they don't rapidly adopt AI functionalities

By The Numbers

• 106%: Projected CAGR for AI drug discovery tools through 2030

• 32%: Projected CAGR for AI in radiology

• $136.2B: Estimated 2030 TAM for foundation models

• 124%: Expected improvement in overall clinical trial success rates due to AI (from 7.9% to 17.7%)

• 18%: Growth rate for AI data protection, a critical "picks and shovels" play

Key Trends to Watch

• Top analyst picks: Drug discovery (doubling trial success), autonomous maritime systems, AI-derived agtech biologicals, datacenter decarbonization, and world models in gaming

• Overheated sectors: Second-tier AI medical scribes, parts of AI precision medicine (genomics/biomarkers), aerial defense drones, areas of code gen, certain AI for marketing, drone-based crop monitoring

• Healthcare workflow agents: $155 billion market opportunity that improves provider margins and reduces administrative burnout; leaders include Abridge, Ambience, Innovaccer, Commure

• Capability acquisitions: PE-owned healthcare IT companies are acquiring AI capabilities (e.g., R1 RCM's acquisition of Phare Health for AI inpatient coding)

The Wrap The 2026 outlook is binary: massive value creation for differentiated AI winners and disproportionate value destruction for undifferentiated startups and slow-moving incumbents. AI winners will successfully pursue network effects, unique data moats, and solutions requiring deep domain insights and long building timelines.

Read Full Report PitchBook 2026 Artificial Intelligence Outlook