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.
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.
Among these likely AI beneficiaries, investors may want to pay particular attention to companies that fit at least one of four categories.
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.
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.
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.
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.
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.
The respiratory system, like many of the other human systems (e.g., cardiovascular, digestive), is a wondrously complex and sophisticated arrangement of organs working together to maintain homeostasis.Contact an Office in Your AreaChronic obstructive pulmonary disease, more commonly referred to as COPD, is a health problem facing adults in the U.S. Because of its progressive nature and increased age as a leading factor, there is a greater prevalence of COPD in seniors. The good news is that many adults can easily reduce their risk of COPD through lifestyle management. COPD represents a group of lung diseases, with the two most common being emphysema and chronic bronchitis.Symptoms of COPD includeConstant coughingWheezingShortness of breathCoughing up mucusTightness in the chestResearch also suggests that there may be a link between poor air quality and COPD. The American Lung Association estimates that between 80-90% of COPD cases result from smoking. Unsurprisingly, secondhand smoke is a significant risk factor as well. Seniors should take the following steps to reduce their risk of COPD:Older adults that smoke should get support from a primary care physician and take steps to quit. There are many programs, services, and products that can help.Seniors should avoid contact with secondhand smoke whenever possible.Reducing exposure to air pollution can help relieve symptoms. Many cities issue poor air quality warnings when these warnings are in effect, seniors should limit outside activities. Seniors should avoid airborne irritants (chemicals, fumes, etc.) in the home.A healthy diet and exercise plan can improve lung function and overall health with direction from a physician.Older adults should understand the impact of aging on their respiratory system and reduce their risk of any related diseases, illnesses, or conditions.Doctors may recommend getting vaccinations for both influenza and pneumococcal pneumonia to guard against further breathing complications.Comfort Keepers Can HelpComfort Keepers elevates the human spirit for todays seniors and their families through a unique, individualized approach to care that helps seniors thrive and achieve greater wellbeing by fostering everyday positive moments, connection, and a more purposeful life no matter their age or acuity. As part of a healthcare team, an in-home caregiver can assist with activities that slow disease progression or reduce the risk for those with respiratory issues. Comfort Keepers caregivers can help by supporting physician-recommended health programs, preparing meals, encouraging prescribed physical activity, reminding seniors to take medications, and providing transportation to scheduled appointments. References:Healthline. Everything You Need to Know About Chronic Obstructive Pulmonary Disease (COPD). Web. 2018.Everyday Health. 5 Best Ways to Prevent COPD by Chris Iliades, MD. Web. 2018.Aging Care. An Overview of COPD by National Institutes of Health. Web. 2017.Unity Point Health. The Top 8 Respiratory Illnesses and Diseases. Web. 2014.American Lung Association. Lung Capacity and Aging. Web. 2017.Centers for Disease Control and Prevention. Chronic Respiratory Disease. Web. 2017.
As seniors age, physical activities can have not only positive physical effects, but positive cognitive effects as well.Contact an Office in Your AreaIn one study, 100 nursing-home residents performed resistance exercises three times a week for 10 weeks. At the end, the exercise group could lift significantly more weight, climb more stairs, and walk faster and farther than their sedentary counterparts.Its been proven time and again that exercise is good for seniors physical and mental health. Regular exercise, even in small amounts, can improve mood, relieve stress and improve health. According to the CDC, four of the five most expensive health conditions older adults face can be prevented or managed with physical activity. But, only about 35% of adults over the age of 65 are physically active. Any senior starting a new exercise plan should consult with their physician. And, it is helpful for family and members of the care team to assist and support physical activity in any way they can. For those that are physically able to begin an exercise program, regular movement can help them live a more vibrant and healthy life. Some of the health benefits include:Improved mental health, mood and outlookPrevention, or improvement of, diseases such as diabetes, obesity, heart disease, and osteoporosisReduced pain from arthritis and minimizing its severityDecreased risk of fallsEach individual has different needs when it comes to exercise and varying health conditions that may need to be taken into consideration before beginning an exercise regimen. A health professional to determine the best approach to physical activity with senior care.There are a variety of ways to incorporate aerobic activity, strength-building exercises, stretching and balance all without leaving the comfort of home! Aerobic exercise Walking in place, dancing or aerobic routines can help get the heart rate up. These activities improve cardiovascular health and help older adults maintain a healthy weight. Strength building exercises there are many easy strength-building exercises that can help seniors build the muscles they need to do everyday activities and prevent muscle loss. And, exercises can be done with household items or using body weight, so no expensive equipment is required. Stretching Stretching before and after exercise can help prevent soreness after exercise. And, the additional benefit is improved flexibility, which is good for older adults physical health. For those looking to improve their flexibility even more, there are exercise routines available online that include yoga or stretching routines specifically for seniors.Balance exercises Balance exercises help seniors prevent falls and improve mobility. Yoga, tai chi, and other low-impact activities can all help improve balance and overall physical health.Those that need a little assistance getting started should not hesitate to reach out to their doctor, family or caregiver. It is never too late to adopt an active lifestyle! Comfort Keepers Can HelpFor seniors that need a little extra help living an active lifestyle, Comfort Keepers caregivers can help with encouragement, support and assistance with physician-prescribed exercise plans. And, caregivers can encourage overall health through meal planning, grocery shopping, meal preparation and activities. Our custom care plans focus on physical and mental health and wellness activities. Our goal is to see that clients have the means to find the joy and happiness in each day, regardless of age or acuity.To learn more about our in-home care services, contact your local Comfort Keepers location today. ReferencesCenters for Disease Control and Prevention. Adults Need More Physical Activity. Web. 2019.Health and Human Services. Facts & Statistics: Physical Activity. Web. 2017.National Council on Aging. Exercise Programs That Promote Senior Fitness. Web.Readers Digest Canada, 5 of the Best Exercises for Seniors to Build Strength, Improve Balance and Boost Heart Health. Web. Harvard Health Publishing. Exercise after age 70. Web. 2007.
More Americans are choosing to age in place. That is, they opt to stay in their homes rather than move to alternative retirement settings.But that often means they must modify their home, so it's not a danger to their safety and health when their physical abilities change.A new career field has risen to address this need: the Certified Aging-in-Place Specialist (CAPS), a program of the National Association of Home Builders. Certified individuals assess homes to identify and recommend modifications to prevent injuries from falls and other risks.According to the Centers for Disease Control (CDC), one-third of Americans age 65 and over fall each year. The CDC adds that environmental factors lead to about half of all falls that occur at home. In addition to tripping hazards and poor lighting, these factors include a lack of needed modifications, such as bathroom grab bars, handicapped showers, stair railings and ramps. The organization offers a checklist to make sure an older adult's home is as safe as possible.Home modifications help seniors maintain quality of life. They often prevent injuries that lead to a loss of independence and early admission to an assisted living or long-term care facility.The following are examples of commonly recommended modifications:Install grab bars for toilets and tubs and install a walk-in tub and/or tub seatRemove unnecessary throw rugs and fasten down rugs or floor runners to prevent slippingMove furniture to create clear walking pathsKeep objects off the floor and coil or secure cords to the wall to prevent trippingReplace doorknobs with lever door handlesApply non-slip tape on uncarpeted indoor and outdoor stepsReplace standard light switches with rocker-style switchesIncrease the width of doorways and hallways to accommodate wheelchairs and, where possible, lower sinks and countertopsMove often-used items to lower cabinets to avoid the need for step stoolsRepair or replace loose handrails and install adequate lighting in stairwaysInstall an elevator or chair liftInstall an elevated dishwasher or one with drawers for easy accessReplace old stoves with induction cooktops to help prevent burnsReplace ceramic tile floors with hardwood or vinyl for safe standingShedding Light on Home ModificationWhen modifying a home for a senior, don't forget the importance of good lighting. Seniors need two to three times as much light in order to see as well as younger people.Good lighting -- in the form of natural light -- provides seniors safety and other advantages:Sunlight provides a good dose of vitamin D, which helps the body absorb more calcium to strengthen teeth and bones. Choose window treatments that let in sunlight, without glare, to enhance the health of seniors, many of who get outside less than they used to.Daylight also improves psychological health. It lessens the energy-zapping effects of Seasonal Affective Disorder (SAD) and other forms of depression.
Keith 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