LIVE MARKETS-AI set to add up to $16 trillion to S&P 500, says Morgan Stanley
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AI SET TO ADD UP TO $16 TRILLION TO S&P 500, SAYS MORGAN STANLEY
Artificial intelligence is rapidly transforming corporate America, and its impact on the S&P 500 index could be massive.
Morgan Stanley estimates that AI could add between $13 trillion and $16 trillion in long-term market value, which is up to 29% of the index's .SPX current value, and as much as 45% excluding the "Magnificent Seven" tech giants.
This growth is driven by an expected $920 billion in annual benefits from AI adoption, split almost evenly between agentic AI and embodied AI (robotics).
Agentic AI is expected to contribute $490 billion a year, while embodied AI adds $430 billion, together making up 28% of projected 2026 pre-tax earnings.
These gains come from both cutting costs and boosting productivity, as companies use AI to automate repetitive tasks and help employees focus on higher-value work.
While tech hardware and semiconductor sectors may see limited impact, traditional industries like retail, real estate, transportation, and healthcare are poised for major gains, the brokerage said.
AI-related job postings have already grown from 0.8% to 1.6% of all listings between the fourth quarter of 2022 and the same period last year. This shows how quickly companies are integrating AI into their workforce, Morgan Stanley said.
Globally, businesses are expected to spend $3 trillion on AI infrastructure like chips and servers by 2028, with strong returns anticipated.
Morgan Stanley notes that full adoption will take time, but early adopters are already seeing results and companies that use AI strategically not just to cut costs but to innovate are likely to pull ahead.
(Akash Sriram)
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