The concept of the 'economic moat', introduced by Warren Buffett in 1995, refers to the competitive advantages that protect a company from rivals, such as cost leadership, network effects, patented technologies, and high switching costs. In the current landscape, the metaphor of the moat is more relevant than ever, particularly with the advancement of artificial intelligence. The ability of AI to disrupt established companies raises questions about which businesses can maintain their competitive edge amidst these changing dynamics.

Recent developments highlight the fragility of these economic barriers. A notable example is IBM; when AI firm Anthropic announced that its tool Claude Code could automatically modernize Cobol systems, the stock price of IBM plummeted significantly. This event underscores the rapid pace of innovation in AI and its potential to dismantle long-standing industry protections that once seemed unassailable. Companies that had historically been viewed as secure may find their positions vulnerable as AI technologies evolve.

The implications of this shift are profound for the business landscape. Firms must now reassess their strategies and potentially rethink their value propositions to remain competitive. As AI continues to advance, traditional economic moats may no longer offer the protection they once did, prompting a reevaluation of how companies can sustain their advantages in a rapidly changing technological environment.