"AI is transforming everything" spreads to Wall Street! Morgan Stanley(MS.US) worldwide layoffs of 3%, covering three core sectors

A media report citing information from industry insiders said that Morgan Stanley (MS.US), a Wall Street financial giant, will cut about 3% of its total global workforce—around 2,500 positions. Analysts commenting on this new news development say that as the U.S. corporate world has continued to push a trend of white-collar layoffs since earlier this year, compared with past rounds, this Morgan Stanley layoff looks more like the result of a combined effect of “AI agent efficiency gains + organizational optimization + resource reallocation,” especially since AI has indeed become one of the key narrative backdrops for layoffs and restructuring in financial companies’ critical business units.

Over the past 12 months, Morgan Stanley’s stock price has risen by about 38%. According to media reports, this round of layoffs is concentrated among employees affecting the bank’s three most core business units: investment banking and trading, wealth management, and investment management business units. The reduction in headcount reflects the combined impact of the evolution of Morgan Stanley’s business priorities, adjustments to its regional footprint, cost reduction and efficiency gains brought by AI agents, and individual performance considerations. Insiders said the layoffs are being carried out simultaneously in U.S. and international offices.

Insiders said that many roles were cut on Wednesday, even though this process had already begun to be discussed internally among employees last week. In recent years, Morgan Stanley has carried out several rounds of small-scale layoffs.

Within its wealth management business unit, the layoffs involved private bankers and certain entry-level operations-type positions. Some affected employees previously handled providing mortgage loans and related credit advisory services to high-net-worth clients.

This personnel adjustment occurred after Morgan Stanley went through a strong fiscal year performance. Morgan Stanley currently has about 83,000 employees, and this financial giant’s annual revenue from its investment banking and markets trading business and its wealth management business—both in 2025—has set new record highs.

From the industry as a whole, Wall Street’s large financial institutions experienced one of their strongest years in 2025, driven by a major rebound in corporate deal activity, sharp volatility in the stock market, increased trading activity amid frequent record highs, and affluent high-net-worth clients’ continued allocation to proprietary financial products.

Morgan Stanley’s wealth management business unit typically contributes nearly half of the giant’s overall revenue, and revenue in the fourth quarter grew by 13%.

First batch of losers in the AI era?

This round of layoffs also coincides with a broader wave of white-collar job cuts in the U.S. corporate sector. Many companies have viewed the significant productivity boost brought by the concentrated explosion in 2026 of AI technologies—especially AI agents that can autonomously execute tasks, such as Claude Cowork from Anthropic and OpenClaw—one of the core reasons behind the 2026 corporate layoff wave.

Last month, one of Twitter’s founders, Jack Dorsey, said that the digital payments giant Block (XYZ.US), which he leads, will lay off about 40% of its employees—more than 4,000 people—and said that rapidly advancing AI agent systems are enabling the company to run all business lines with fewer people. But some analysts questioned this explanation, arguing that it mainly reflects an organization viewed as overstaffed and with slowing profit growth trying to cut operating costs.

Other technology companies have also listed AI cost reduction and efficiency gains as part of their business restructuring actions. CRM cloud software giant Salesforce (CRM.US) cut about 4,000 customer support roles last year, while social platform operator Pinterest (PINS.US) said it plans to cut nearly 15% of employees and reallocate resources to AI-engineering-related roles.

The “AI upends everything” narrative spreads to Wall Street

The “Anthropic storm” hitting software stocks is still rippling through global stock markets, and the selloff is accelerating as it spreads to wealth advisory and management and even real-estate advisory—any traditional industries that seem like AI could thoroughly upend. The market’s pessimistic expectations of “AI upends everything,” like a chain reaction of dominoes, are hitting industry sectors one after another—from software, SaaS, and PE to insurance, traditional investment banks, wealth management, real estate and property management, and even logistics—where stocks “fall one after another.” In the past two to three weeks, AI can be said to have swept through traditional industries individually, and investors are accelerating the dumping of potential “losers.”

As a series of breakthrough AI agents focused on agentic workflows are rolled out one after another, they may upend one traditional industry after another and compress pricing power across the broader economy. Since this year began, concerns that the “AI super wave could squeeze corporate profits, disrupt employment, and bring a deflationary shock” have quickly spilled over into multiple traditional economic sectors, including software, private credit, wealth management, real-estate services, and insurance.

What truly terrifies global investors—the grand narrative of “AI upends everything”—strictly speaking began in early February, when Anthropic launched a major legal plugin for its rapidly popularized agentic AI agent, Claude Cowork. This super tool for fully automated AI contract review, achievable with extremely low technical barriers, caused the market values of companies such as Thomson Reuters and RELX, the parent company of LexisNexis, to evaporate by billions of dollars. Meanwhile, the market is increasingly worried that agentic AI workflows like those of Claude and OpenClaw (formerly known as: Clawdbot, Moltbot), which have gone viral and spread like wildfire, could weaken the established business models across industries.

From the perspective of financial technology and AI engineering, the first areas on Wall Street to be reshaped by AI are usually not top-tier relationship-based roles, but process-driven, standardized, template-able roles—for example, parts of operations, document processing, compliance support, internal research and organization, basic client service, and certain loan support steps. For example, roles that were cut in Morgan Stanley’s wealth management business included private-banking support and some mortgage/loan-related positions. These kinds of jobs are already more easily subject to workflow automation, AI-assisted writing, data extraction, and rules-engine redesign. A research report by Morgan Stanley itself also shows that in industries where AI is most likely to have an impact, sample companies on average saw a net reduction of 4% in headcount, while productivity increased by an average of 11.5%.

For Morgan Stanley, this round of global layoffs is first and foremost an action to optimize operations and organization; but placed under the logic of the grand narrative of “AI upends everything” in 2026, it also reflects a deeper, long-term trend: when almost all large companies are re-evaluating which jobs will be automated, and which resources should be shifted to higher value-added business lines, Wall Street is entering a stage of “strong performance, and layoffs anyway,” because the market no longer rewards growth alone—it also rewards operating leverage and cost-reduction-and-efficiency-gain models driven by AI technology.