Morgan Stanley stated that the AI diffusion rate will continue to drive excess returns in 2025, and investors need to continue focusing on AI Enabler/Adopters. The financial sector is expected to become a new leader in AI "rate changes," preferentially selecting Adopters with high pricing power. As AI agents become more prevalent, AI software stocks may outperform Semiconductors.

AI diffusion rate drives excess returns.

The team of Morgan Stanley Analyst Edward Stanley stated in a Research Report on January 6 that since the launch of ChatGPT more than two years ago, the diffusion of AI is still in the early stage, but the expansion speed is accelerating. The utilization rate of AI by enterprises is gradually increasing, especially in non-technical industries.

The AI diffusion rate has driven excess returns in stocks. The latest survey shows that among the over 3,700 Global Equity stocks covered by Morgan Stanley, the Market Cap of AI "Enabler/Adopter" category stocks has grown by 85% since 2022, adding approximately 14 trillion dollars.

Stocks reclassified as "Core to Thesis" have outperformed the S&P 500 Index by 45% since the release of ChatGPT. The number of "Core to Thesis" stocks in non-technical industries has significantly increased, indicating that companies are gradually incorporating AI into their core business logic. Stocks downgraded to "Disrupted" or "Wildcard" have notably underperformed compared to the S&P 500 in the long term.

The year 2025 will be a key year for AI agents.

Morgan Stanley believes that 2025 will be a key year for AI agents, and similarly to previous technology cycles, the stock market is ready for AI software companies to take over from AI semiconductor companies.

AI agents, as the name suggests, grant software programs agency, transforming interaction with algorithms from passive (chatbots responding to user prompts) to active. Similarly, it shifts from static systems operating within clearly defined rule sets to dynamic systems seeking the best solutions to constantly changing problems.

Gartner estimates that by 2028, 33% of enterprise software applications will include AI agents, which will allow 15% of daily work decisions to be made autonomously by AI.

The Software Sector may outperform the Semiconductors Sector due to the proliferation of AI agents. Since the launch of ChatGPT, the excess returns of the Semiconductors Sector have decreased from 100% to 70%.

The diffusion rate of AI in the Financial Sector is rapidly increasing.

Morgan Stanley believes that the financial industry is currently the industry experiencing the most rapid development of AI. If, over the past six months, utility stocks in AI Electrical Utilities Trading have been the focus for stock pickers, then in 2025, financial stocks may see a similar shift.

The importance of AI to financial companies is gradually rising. Morgan Stanley's survey shows that an increasing number of financial companies are shifting their view of AI's relevance in investment arguments from "not important" to "moderately important." This shift reflects the accelerated adoption of AI technology applications in the financial industry and its immense potential in improving operation efficiency, risk management, and customer service.

Morgan Stanley stated that there are two types of stocks in the Financial sector that investors should pay special attention to.

One is the Financial and Payment Stocks that are marked by Analysts for increased exposure to AI, which means these stocks have been recognized by Analysts for their progress in the application of artificial intelligence technology, potentially containing higher growth potential.

The second is the Financial Stocks for which Analysts have upgraded the importance rating of AI, indicating active changes in these companies' strategic layout for artificial intelligence, likely leading to better market performance in the future.

Prefer those AI adopters with strong pricing power.

Morgan Stanley also suggests that investors focus on the key differences in pricing power among AI adopters.

Analysts indicate that pricing power is one of the key factors in selecting AI adopter stocks.

In the context of rapid development in AI, companies with strong pricing power can better translate the efficiency improvements brought by artificial intelligence into actual gains, thus gaining an advantage in market competition.

The past market performance has proven this point. Since the release of ChatGPT, high pricing power adopters have consistently outperformed their low pricing power counterparts, demonstrating stronger profitability and market competitiveness.

Adopter companies with high pricing power can transform the efficiency gains brought by AI technology into sustainable profit growth. In industries with higher pricing power, such as Finance, Energy, and Consumer, the benefits of AI efficiency are better retained.

In addition to pricing power, companies that possess high-quality data, platforms, and moats also have significant advantages.

Analysts state that high-quality data is the foundation for training AI algorithms, improving the accuracy and effectiveness of models. Strong platforms help to integrate resources, achieving economies of scale and synergies. Moats can protect a company's competitive advantage, preventing competitors from easily imitating and eroding it. These factors work together to make the development of these companies in the field of AI more robust, and their investment value higher.

Editor/lambor