AI Phase Two Begins! Morgan Stanley Selects Beneficiary Stocks; Traditional Industries like Halliburton and Bank of America to Benefit from AI Profit Boom

According to Jintou Finance APP, as the US stock market enters the most hectic week of Q2 earnings season, Morgan Stanley Chief US Equity Strategist Michael Wilson noted in his latest report that US companies actively integrating artificial intelligence (AI) capabilities are seeing substantial profitability improvements. He emphasized that AI application has clearly transitioned from the “experimental phase” to the “quantifiable enterprise value creation phase.”

Wilson's team stated that for companies with AI as a core investment logic and whose pricing power ranges from neutral to strong, market expectations for their profit margins are “improving most significantly.” He estimates that by 2027, the widespread adoption of AI will expand net profit margins by approximately 100 basis points for related firms.

“The outlook for companies embracing AI is becoming increasingly attractive,” Wilson wrote in the report. He specifically indicated that sectors traditionally considered “vulnerable,” such as transportation, software & services, and professional services, are demonstrating high attractiveness within the AI adopter group.

Which stocks are the main beneficiaries of AI adoption?

According to Morgan Stanley’s analysis, companies such as Halliburton (HAL.US), Bank of America (BAC.US), CVS Health (CVS.US), and NextEra Energy (NEE.US) are expected to be major beneficiaries of AI adoption. Meanwhile, tech giants like Alphabet (GOOGL.US), Meta Platforms (META.US), and Nvidia (NVDA.US), which led the first round of the AI rally, continue to stand out in Wilson's latest screening.

In fact, a basket of AI adopter stocks compiled by Bank of America has outperformed the so-called “hyperscalers” this year. Meanwhile, previously strong semiconductor-related stocks have recently pulled back due to overvaluation concerns.

Wilson believes this trend may continue, as “AI applications are clearly moving from the experimental phase to the stage of quantifiable enterprise value creation.”

Earnings season data confirm AI dividends are being realized

Wilson’s optimism is supported by the latest earnings data. Morgan Stanley's analysis of over 17,000 company earnings calls and presentations found that this earnings season, about 40% of AI adopters mentioned at least one quantifiable benefit from AI, nearly double the 21% from a year ago. Among the broader S&P 500, about a quarter of companies discussed quantifiable AI benefits, a significant increase to 25% from 14% a year prior.

In terms of benefit categories, financial gains—including revenue growth, reduced operating costs, and increased capital efficiency—accounted for the largest share of AI-related comments, followed by productivity improvements. Technology companies remain the most enthusiastic to discuss quantifiable AI benefits (51%), followed by communications services (44%) and financial companies (37%), reflecting that AI adoption is spreading from traditional tech to a broader range of industries.

Wilson also pointed out that over the past year, the average net increase in productivity reported by companies is nearly 10%, mainly driven by software development, customer service, finance, and operations. “We continue to view AI adoption as an important source of profit growth and operating leverage improvement,” Wilson stated.

AI spending controversy: The tug-of-war between trillion-dollar investment and profit realization

Although the profit outlook for AI adopters is improving, market concerns over the huge capital expenditures for AI have not dissipated, and investors are becoming increasingly selective in identifying potential winners.

The Bank for International Settlements (BIS) previously warned in its latest annual economic report that the world’s five largest hyperscalers are expected to cumulatively spend over $1 trillion on AI-related capital expenditures between 2025 and 2026. This scale already far exceeds the pace of corporate profit and free cash flow growth, with some firms starting to rely on debt financing. BIS particularly warned that this concentrated, competition-driven investment is highly reminiscent of historical episodes such as canal mania, railroad speculation, and the dot-com bubble.

Goldman Sachs strategists have also cautioned that investor expectations for AI trades may be ahead of reality, with “growing tension between strong fundamentals and high valuations.” Goldman estimates the S&P 500’s Q2 earnings will grow by about 22% year-over-year, with AI infrastructure contributing nearly two-thirds of the increase.

Based on compiled data, current market expectations for the S&P 500 net profit margin are at their highest level in over a decade, making profitability a clear focal point of the Q2 earnings season.

This week, companies representing about one-third of the S&P 500’s total market capitalization are expected to report results, making it the busiest week this earnings season. Tech giants such as Apple (AAPL.US), Microsoft (MSFT.US), Amazon (AMZN.US), and Meta will successively announce their earnings, and investors will be watching closely to see whether their massive AI investments translate into profit.