Caroline Hyde

Here to break down the AI impact across all sectors is Morgan Stanley, Global Research Director, Katie Huberty.

I mean, it's such a detailed report that looks across stocks with a very wide lens.

But in the here and now, I want to go to that word indiscriminate and just that paragraph of the report where you summarise the last few weeks.

What do you think was happening?

So I think it's important on the back of the announcement that you just discussed to understand that we're in the very early innings of what is likely to be a $10 trillion CapEx investment cycle.

Because we knew this adoption story was going to be critical and it was going to touch all sectors of the market,

We have now five times over mapped the 3,600 stocks that we cover to understand rate of change, exposure, materiality, pricing power.

We see that in software and services.

This is the fifth time you've kind of done this exercise of mapping global AI stocks, right?

And you list margin expansion as the leading piece of evidence of ROI.

I'm thinking back to earlier in earnings season when we had names like Salesforce ServiceNow and that part of the research report I flagged at the beginning, fundamentals.

they didn't really get the benefit of the doubt from the market.

They showed actually quite a lot of real-world deployment of that technology, but something isn't quite believed by the street.

What is that?

So if you go back two years ago, the big rate of change in exposure materiality was energy and utilities.

that sector outperformed the most in 2024.

Last year, it was financials.

At the beginning of 2025, we highlighted as the biggest rate of change.

Financials, by many accounts, even outperformed parts of the technology sector last year.

Katie, tied to this, one of the big moments of last year was Morgan Stanley launching its private companies coverage, going much deeper on private companies who are so active in this world, right?