Megatrends: How to Invest in the AI Boom
Morgan Stanley Wealth Management
Jan 08, 2024
Florida - Southwest
Email US
Click to Email Us
Key Takeaways
- Investors looking to capitalize on AI’s rapid growth should consider stocks of dominant larger companies that are quickly integrating the technology.
- Many of these companies are harnessing AI to improve efficiency, introduce new services or roll out enhancements that can help reduce costs and boost revenue.
- Companies that supply the critical inputs needed for the development and use of AI, such as semiconductors, are also likely to benefit.
- Investors should pay close attention to AI beneficiaries with low valuations relative to how fast their earnings are growing.
Artificial intelligence (AI), and particularly generative AI, is currently one of the most disruptive forces in business, permeating virtually every sector of the economy and promising to usher in new levels of productivity. Morgan Stanley’s Global Investment Office sees AI as one of the most important investment themes of the next decade and estimates that it will rapidly grow to a $3 trillion industry in the next several years.
Where can investors find compelling AI opportunities? Thus far, many investors have focused on a handful of mega-cap tech stocks known as the “Magnificent 7” as the main beneficiaries of advances in AI. But given how wide-ranging AI’s impact will likely be, we believe there are far more companies that stand to benefit, across sectors ranging from Consumer Discretionary to Health Care and Financials. Here’s a look at the types of companies our strategists are watching.
Leaders May Keep Leading
Many of the economic benefits of AI are likely to accrue to companies that are already leading in their industries. Specifically, large firms with dominant market share, recurring revenues and “sticky” customers are positioned to use AI to amplify their already considerable competitive advantages. These companies often have customers who cannot easily switch to rival products and thus may be more willing to try their AI product—and even pay more for it—because it is from a company they already know and trust. Companies that move quickly to integrate AI into their business models are more likely to avoid disruption and widen their lead.
Four Types of AI Leaders
Among these likely AI beneficiaries, investors may want to pay particular attention to companies that fit at least one of four categories.
- 1Margin Expanders
These companies are using AI to reduce costs. Generative AI tools that help software companies write code, for example, may help them lower their often-sizable Research & Development costs and more rapidly introduce new products and features. Professional services companies are also using AI to realize savings: For example, one leading tax-services provider uses AI tools to help its accountants process significantly more returns in the same amount of time, without having to hire additional professionals.
- 2Trailblazers
Companies in this category are rolling out new AI-powered products or services to boost sales or create new revenue streams—often targeting existing customers who may be reluctant to switch providers. There’s precedent for this strategy: Recall that in the 1990s, many people first tried web browsers from their existing operating-system vendor, and in the 2000s, customers tried video-streaming from their DVD delivery service. An example today is a leading online meal-delivery service that is developing a new generative-AI phone-answering system to take orders and make add-on suggestions. This helps increase order sizes, as well as reducing missed opportunities from the 20% of customers who say they would still prefer ordering by phone instead of online.
- 3Price Raisers
These industry leaders are introducing AI-based enhancements to justify charging more. They include a leading video-conferencing provider whose new AI “companion” will help users catch up on missed meetings by generating summaries. Similarly, a company that provides e-commerce tools for retailers has added generative-AI features to help clients write product descriptions or answer their operations questions, such as how to create a holiday sale. Such value-added features can make it easier for these companies to justify higher prices, particularly in industries where customer frustration has been growing over routine price hikes with minimal perceived improvements.
- 4Input Suppliers
These companies provide the “building blocks” of AI technology, including data-management tools, data centers and the equipment needed for advanced chips manufacturing. As organizations add the computing capacity necessary for AI, global semiconductor companies are among the most likely beneficiaries, with surging demand for chips helping drive record profitability. But they are not the only ones. Investors may also want to watch select companies that provide the infrastructure and tools for businesses to develop or use AI, such as companies that specialize in data management for corporate IT departments and client-to-cloud networking services for data centers.
Mind the Risks and Be Selective
While AI is likely to usher in long-term growth in many industries, investors should be mindful of a potential bubble in the near future. There have been recent hype cycles around some new technologies, such as cryptocurrency and work-from-home technology, that have fizzled out to some degree. It may take a while before investors see big productivity improvements from AI, and companies that overpromise could fare poorly.
There is also the risk that AI will actually reduce what economists call “efficient scale,” making it so inexpensive for smaller companies to compete that it effectively erases the size advantages enjoyed by larger players. Lastly, new regulations and legal battles over issues such as copyrights and intellectual property could smother AI development.
Investors should be selective. Pay particular attention to likely AI beneficiaries that are favored by equity analysts and sport comparatively low valuation multiples relative to how fast their earnings are growing.
For a list of 25 stocks that our strategists believe are attractively priced and likely to benefit from growth in AI in the next several years, ask your Morgan Stanley Financial Advisor for a copy of the October 20, 2023, AlphaCurrents report, “Building an AI Army.”
Your Financial Advisor can share specific investment recommendations that may help you position for rapid growth in AI.
- To view the original version of this article visit www.morganstanley.com/content/msdotcom/en/articles/ai-investing-opportunities
- Seniors Blue Book was not involved in the creation of this content.
Other Articles You May Like
Our hearts are dedicated to yours
At Lee Health, you have everything you need to take care of your heart health. Our expert cardiovascular team is the largest and most experienced in Southwest Florida. No matter where you are in your health care journey, our experts are alongside you every step of the way. Lee Health Heart Institute includes primary and specialty care, nationally ranked hospitals, Shipley Cardiothoracic Center, cardiac rehabilitation and moreall in a safe and comforting environment. Were ready to help you stay active, engaged and prepared to enjoy the important things in life.The Lee Health Heart Institute is nationally recognized for excellence in cardiovascular care. HealthPark Medical Center has been recognized as a PINC AI I Fortune 50 Top Cardiology Hospital in the country and 1 of only 6 hospitals recognized in Florida and the only hospital in Southwest Florida underscoring Lee Healths commitment to exceptional cardiovascular care and medical excellence in the region. The Lee Health Heart Institute ranks 9th in the nation and top 3 in Florida through its PINC designation. Our dedication to advancing heart health is evident through ongoing clinical trials, published research, and 11 abstracts presented at the American College of Cardiology Scientific Sessions. Heart Institute Locations Near YouThe Heart Institute incorporates cardiovascular services, cardiology, and cardiothoracic surgery. Locate Lee Health Heart Institute clinics near you for convenient locations including experienced cardiologists, cardiothoracic surgeons, and more. Dedicated cardiovascular health to patients located minutes from Cape Coral, Fort Myers, Naples, Lehigh Acres, Estero, and Bonita Springs.Cardiothoracic Surgery - Heart Institute at Shipley Cardiothoracic Center9981 S HealthPark Dr, Suite 156 Fort Myers, FL 33908Phone number(239) 343-6341 Cardiology - Heart Institute at Bass Road16261 Bass Rd, Suite 300 Fort Myers, FL 33908Phone number(239) 343-6410Cardiology - Heart Institute at Cape Coral Hospital708 Del Prado Blvd, Suite 7 Cape Coral, FL 33990Phone number(239) 424-3660Cardiology - Heart Institute at Coconut Point23450 Via Coconut Point Estero, FL 34135Phone number(239) 468-0121Cardiology - Heart Institute at Medical Plaza One9800 S HealthPark Dr, Suite 320 Fort Myers, FL 33908Phone number(239) 343-6350Cardiology - Heart Institute at Metro Parkway13340 Metro Pkwy, Suite 200 Fort Myers, FL 33966Phone number(239) 343-0550Cardiology - Heart Institute at Sanctuary8960 Colonial Center Dr, Suite 302 Fort Myers, FL 33905Phone number(239) 343-9700
National Cancer Survivors Month
June is National Cancer Survivor Month, a time to celebrate, support, and raise awareness about cancer survivorship.There are more than 18 million cancer survivors in the U.S.Statistics from the National Cancer Institute (NCI) project that the number will grow to 26 million by 2040.More than 2 million people in the U.S. will be diagnosed with cancer in 2025.The NCI projects that an estimated 618,120 people in the U.S. will die from the disease in 2025.Be a part of the NCA Difference and support our mission of improving the care of cancer patients through our no-cost second-opinion services. Your support helps improve patient outcomes and peace of mind!
Understanding Assisted Living in Utah: A Comprehensive Guide for Families
As Utahs population continues to age, many families are exploring senior living options that provide both independence and essential support. Assisted living is one of the most sought-after solutions, offering a balanced environment for seniors who need help with daily activities but still wish to maintain a sense of autonomy. If you're beginning the search for assisted living in Utah, understanding what these communities offer and how to choose the right fit is essential.This guide will help you navigate assisted living in Utah with clarity, confidence, and compassion. What Is Assisted Living?Assisted living refers to a residential community designed for seniors who are largely independent but may need assistance with tasks like bathing, dressing, medication management, or meal preparation. Unlike skilled nursing facilities, assisted living communities do not provide round-the-clock medical care, but they do offer 24/7 supervision and support from trained staff.Most assisted living communities in Utah also offer amenities such as:Private or semi-private apartmentsGroup dining with nutritious mealsHousekeeping and laundry servicesTransportation assistanceRecreational and social activitiesOn-site wellness programs Why Utah Families Choose Assisted LivingUtah has become a popular place for retirees and seniors due to its beautiful landscapes, relatively low cost of living, and strong sense of community. Assisted living communities in Utah often incorporate the natural beauty of the state, offering seniors a lifestyle thats both safe and enriching.Some key benefits of assisted living in Utah include:Peace of Mind for Families: Knowing your loved one is in a secure and supportive environment can ease the burden of caregiving and reduce family stress.Tailored Care: Assisted living communities evaluate each residents unique needs and develop a personalized care plan to support their independence and health.Social Opportunities: Many Utah seniors face isolation, especially in rural areas. Assisted living communities encourage social interaction, which is essential for mental and emotional well-being.Access to Nature and Recreation: Utahs outdoor culture often extends into its assisted living communities, offering residents scenic views, walking paths, and outdoor events. How to Choose an Assisted Living Community in UtahWhen selecting an assisted living community for yourself or a loved one, consider the following factors: Level of Care: Ensure the community can accommodate current needs and adapt to future care requirements. Licensing and Accreditation: Verify that the community meets Utahs health and safety regulations. Location: Proximity to family, medical providers, or familiar neighborhoods can make the transition smoother. Costs and Contracts: Understand the fee structure, what's included, and any additional costs. Culture and Environment: Visit communities in person or virtually to observe how staff and residents interact, and assess whether the atmosphere feels welcoming and respectful. Finding Assisted Living Communities in UtahSeniors Blue Book is a trusted resource for families exploring senior care options across Utah. Our comprehensive directories help you compare services, amenities, and locationsall in one place.To start your search, explore these helpful pages:Utah Senior Housing DirectoryAssisted Living Communities in UtahThese listings are updated regularly and include detailed profiles of local providers, ensuring you have accurate information to make informed decisions. Final ThoughtsChoosing assisted living is a major life decision that can significantly enhance the quality of life for Utah seniors and provide much-needed relief for their families. Whether youre just beginning your research or ready to schedule tours, understanding your options is the first step toward a supportive and fulfilling future. Assisted living in Utah offers more than just careit offers community, dignity, and peace of mind. Start exploring your options today with help from the Seniors Blue Book.
Local Services By This Author
Morgan Stanley Wealth Management
Financial Advisor 8889 Pelican Bay Boulevard, Naples, Florida, 34108Keith Philippi, CFPSenior Vice President,Financial Advisor,Morgan StanleyWhether youre building a business, planning for retirement or setting your bucket-list goals, you need a Financial Advisor on your side.I will take the time to learn whats most important to you. Ill then work with you to create a comprehensive wealth strategy. From there, I can suggest realistic financial solutions to help you meet your goals.As your Financial Advisor, Ill l walk with you through the various stages of life. If your financial plans change, or the market shifts, Ill help adjust your accounts. My aim: to keep you on course toward your most important life goals.The ProcessIntroduction & Discovery MeetingThis is where we get to know one another. You'll learn about our approach and capabilities and we'll learn about your unique family, assets, liabilities and goals to help formulate the strategies that are designed for you.In-Depth Analysis and DesignIn this stage, we'll use the vast resources of Morgan Stanley to analyze any investments and plans currently in place and to custom design our recommendations tailored specifically to you, taking into consideration taxable impact, acceptable risk levels and objectives.Plan Presentation & DeploymentHere, we present the comprehensive strategies that have been designed to complement one another in light of your overall financial picture. A roadmap of next steps is laid out in a meaningful and understandable way.Ongoing Monitoring & AssessmentRound the clock monitoring of assets as well as coordinated communication with your other trusted advisors, such as your Estate Attorney and CPA,to ensure that as markets adjust and life happens, your plan is kept up to date. Ongoing reviews in person, via zoom or phone will occur on a regular basis.Services IncludeAlternative InvestmentsFootnoteLong-term Care InsuranceFootnoteWealth ManagementFootnote401(k) RolloversTrust ServicesFootnoteRetirement PlanningFootnoteWealth PlanningFootnoteStructured ProductsFootnoteTrust AccountsFootnoteBusiness PlanningFootnote