Morgan Stanley report highlights AI's growing importance in various sectors.

From Investing.com: 2024-06-08 04:31:06

Morgan Stanley’s recent report explores the evolving role of AI across sectors, showcasing shifts in AI exposure for 337 stocks worth over $11 trillion. Notably, AI is significantly more material to 97% of Utilities coverage, with the potential to boost operational efficiency and overcome power bottlenecks effectively.

AI’s materiality to investment theses has substantially increased, impacting 446 stocks valued at $15 trillion. Recognizing AI’s potential for operational efficiencies and innovative solutions, the study highlights the growing importance of AI in enhancing productivity and driving industry advancements.

Morgan Stanley stresses the importance of tracking AI’s rate of change to identify alpha opportunities. Two key strategies for generating AI alpha are highlighted: ‘Enablers with Rising AI Materiality’ and ‘Adopters with Strong Pricing Power,’ with significant potential for returns in the Utilities sector.

The report also delves into sector-specific shifts in AI exposure and materiality, noting substantial increases in enablers across Utilities, materials, and industrials. By 2025, AI-driven productivity gains are expected to contribute approximately 30 basis points to net margins, with Software/Internet-related groups identified as top beneficiaries of AI efficiency gains.

Industry groups like Software Services, Consumer Services, Health Care Equipment & Services, Financial Services, and Media & Entertainment are poised to benefit significantly from AI-driven efficiency gains, potentially representing over 30% of expected 2025 net income for the S&P 500.



Read more at Investing.com: Morgan Stanley’s deep dive on AI’s rate of change By Investing.com