AI Adopters Drive Market Growth in 2024, According to Morgan Stanley
In a recent note, equity strategist Edward Stanley at Morgan Stanley highlighted the growing importance of companies that adopt artificial intelligence (AI) as key players in the market for 2024. In 2023, these adopters experienced a modest 6% rise, but Morgan Stanley’s analysts forecast an average 27% upside for these companies as AI continues to ramp up, with expectations of further acceleration throughout 2024.
While companies that enable the use of AI took center stage in 2023, contributing over $6 trillion in market capitalization driven by investments in chipmaker Nvidia and tech giants like Alphabet and Microsoft, Stanley believes that the success of these enablers now depends on the adopters. Morgan Stanley estimates that increasing leverage on AI investments to two times net debt-to-EBITDA could result in an additional $3 trillion in spending on enabler hardware and software, accounting for 39% of the group’s estimated revenues.
Morgan Stanley’s list of adopters includes several banking and financial services stocks. JPMorgan Chase and Wells Fargo are among these, with JPMorgan dedicating more than half of its $15.3 billion technology budget to transformative initiatives and Wells Fargo collaborating with Google on a virtual assistant powered by the company’s cloud conversational AI platform. Both stocks saw gains of at least 20% in 2023. Credit-card issuer American Express is also expected to benefit from AI, thanks to advancements in real-time credit decisions and fraud detection through AI and machine learning. The company’s shares rallied by 27% in 2023, and Morgan Stanley’s price target suggests a 6% upside for the shares.
Beyond the financial sector, Morgan Stanley identifies UnitedHealth Group as a company leveraging AI capabilities to offer medical insights and drive efficiencies. In the energy industry, oil companies Baker Hughes and Schlumberger NV have also partnered with AI-focused companies to implement innovative oilfield solutions. The Trade Desk and Sony Group are other notable names on Morgan Stanley’s AI adopters list.
As AI adopters take center stage in 2024, Morgan Stanley’s analysis suggests that these companies will play a crucial role in driving market growth. Their increased investments and utilization of AI technologies are expectSed to have a significant impact not only on their own performance but also on the success of enabling companies. With a diverse range of industries embracing AI, from banking and healthcare to energy and entertainment, the transformative potential of AI continues to unfold across various sectors.
Please note: The article above is based on a news report generated by OpenAI’s language model, with factual information sourced from the accompanying article link.
