Morgan Stanley sees $13T+ long-term value from AI adoption in S&P 500

Investing.com -- Morgan Stanley estimates AI adoption could generate more than $13 trillion in long-term market value for companies in the S&P 500, driven by rapid capability gains and widespread corporate uptake.

The bank developed a new framework to measure the benefits of AI across industries, concluding that automation and augmentation could deliver around $920 billion in long-term benefits, translating into $13-16 trillion of potential equity value creation.

“We believe the rate of improvement in AI capabilities will continue to be non-linear; if you truly apply this lens to stock assessment, the implications are profound,” strategists Stephen Byrd and Jamil Ohayia said in a Wednesday report.

They estimate that about 90% of occupations will be affected in some way by AI, reshaping the future of work through both job cuts and new roles tied to innovation and productivity.

The strategists noted that value creation will not simply come from replacing workers, but also from new hiring and entirely new products and services enabled by AI.

Consumer Staples Distribution and Retail, Real Estate Management and Development, Transportation, and Health Care Equipment and Services were highighteed as sectors with the highest potential benefits relative to pretax income.

The team also pointed to signs of an inflection point in corporate adoption. Their latest AI mapping exercise found broadening exposure across sectors, rising earnings revisions linked to AI materiality, and notable gains in Consumer and Real Estate.

They added that there are already “clear signs of alpha from AI materiality among companies — this can be seen in relative price performance and earnings revisions.”

Financials also showed a sharp increase in exposure, while Asia Pacific emerged as the regional leader.

Morgan Stanley emphasized that its projections are conservative, based only on employee cost automation. The estimates do not reflect future non-linear improvements in AI capabilities, which the strategists expect will push actual gains above current forecasts.

They also pointed to accelerating task complexity handled by agentic AI, with capability doubling roughly every seven months. The potential addressable market for AI adoption is nearly evenly split between software-based applications and embodied use cases such as robotics.

In total, strategists said the opportunity amounts to more than 25% of the S&P 500’s estimated 2026 adjusted pretax income.

“If AI capabilities continue to improve rapidly, which we expect, the magnitude of value creation from AI adoption will rise above our estimates,” they said.