Show notes
Our Global Head of Fixed Income & Public Policy Research Michael Zezas discusses how Morgan Stanley’s key themes – deglobalization, longevity, the future of energy, and artificial intelligence – will evolve in 2025 and beyond.----- Transcript -----Welcome to Thoughts on the Market. I’m Michael Zezas, Morgan Stanley’s Global Head of Fixed Income and Public Policy Research. Today I’ll discuss the key investment megatrends Morgan Stanley Research will be following closely in 2025. It’s Wednesday, January 15th, at 10am in New York. Short-term trends can offer investors valuable insights into immediate market dynamics. But it’s the long-term trends that truly shape the investment landscape. That’s why each year, Morgan Stanley Research identifies a short list of megatrends that we believe will provide long-term investment opportunities in an ever-changing world. Three of Morgan Stanley’s megatrends—artificial intelligence, longevity, and the future of energy—carry over from last year. A fourth—the rewiring of the global economy—returns to our list after a hiatus in 2024. While none of these megatrends is new, each has evolved in terms of how it applies to investment strategies. Let’s start with the rewiring of global commerce for a Multipolar World. As I mentioned, this theme rejoins our list of key megatrends after a year-long break. Why? In short, it’s clear that policymakers globally are poised to implement policies that will speed up the breakdown of the post-Cold War globalization trend. Simply put, policymakers are keen to promote their visions of national and economic security through less open commerce and more local control of supply chains and key technologies. Multinationals and sovereigns may have to accelerate their adaptation to this reality. Some will face tougher choices than others, while there are some who may still benefit from facilitating this transition. Knowing who fits into which category—and how this new reality may play out—will be critical for investors. Our next theme—Longevity—remains an essential long-term secular trend, and this year the focus will be on measurable impacts for governments, economies, and corporates. The ripple effects of an aging population, the drive for healthy longevity, and challenging demographics across many geographies continue to impact markets. And in 2025, we see investors focusing on several specific longevity debates: First, innovation across healthcare – especially in an AI world, with obesity medications remaining front and center. Second, impacts on consumer behavior – including the drive for affordable nutrition. Third, the need to reskill aging workforces – especially if retirement ages move higher. And, finally, there’s implications for financial planning and retirement – with a bull market for financial advice just starting. Our next theme centers around energy. When we think about the future of energy, our focus for 2025 shifts from decarbonization to the wide range of factors driving the supply, demand, and delivery of energy across geographies. And the common thread here is the potential for rapid evolution. We’ll be tracking four key dynamics: First, an increasing focus on energy security. Second, the massive growth in energy demand driven by trillions of dollars of AI infrastructure spend, to be met both by fossil fuel-powered plants and renewables. Third, innovative energy technologies such as carbon capture, energy storage, nuclear power, and power grid optimization. And fourth, increased electrification across many industries. We continue to believe that carbon emissions will likely exceed the targets in various nations’ climate pledges. So, we expect focus to shift toward climate adaptation and resilience technologies and business models. Our last key theme is artificial intelligence and tech diffusion. Although it’s been two years since the launch of ChatGPT, we’re still in the early innings of AI's diffusion across sectors and geographies. However, while 2024 was driven by AI enablers and infrastructure companies, in 2025 we expect the market to focus on early AI downstream use cases that drive efficiency and market share. As you heard yesterday, our Global Head of Thematic Research Ed Stanley, explained that there’s alpha in understanding this rate of change. Agentic AI will be center stage, with robust enterprise adoption, stock outperformance for early adopters, positive surprises in model capabilities, greater breadth of monetization, and thus less attention to return-on-investment debates. Before I close, it’s worth mentioning that you will likely see connections between these complex themes. As an example, the complexity of a multipolar world makes energy security all the more vital. The demand for energy connects with the enormous power requirements of AI. And AI is set to drive healthcare innovations which could help us lead longer healthier lives. We see these four themes not as static categories but as an interconnected roadmap for investing over the long-term – and we’ll be sharing more on specific debates throughout the year. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.