As the US second-quarter earnings season enters its busiest week, a new report from Morgan Stanley’s chief US equity strategist, Michael Wilson, indicates that US companies actively integrating artificial intelligence (AI) capabilities are experiencing substantial improvements in profitability. The application of AI has clearly shifted from an "experimental phase" to a "phase of quantifiable enterprise value creation."
Wilson’s team states that for companies where AI is a core investment theme and pricing power is neutral to strong, market expectations for their profit margins have "shown the most significant improvement." He forecasts that by 2027, widespread AI adoption could drive approximately 100 basis points of net profit margin expansion for these firms. "The outlook for companies embracing AI is becoming increasingly attractive," Wilson wrote in the report. He specifically notes that sectors often viewed as "fragile"—such as transportation, software and services, and professional services—are actually showing high appeal within the group of AI adopters.
Which stocks are the primary beneficiaries of AI adoption? According to Morgan Stanley’s analysis, companies like Halliburton (HAL.US), Bank of America (BAC.US), CVS Health (CVS.US), and NextEra Energy (NEE.US) are poised to be major winners. Meanwhile, tech giants like Alphabet (GOOGL.US), Meta Platforms (META.US), and Nvidia (NVDA.US)—which led the initial 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" year-to-date. At the same time, semiconductor-related stocks, which previously rallied strongly, have recently pulled back due to valuation concerns. Wilson believes this trend could continue, as "AI adoption is clearly moving from experimentation to a phase of quantifiable enterprise value creation."
Earnings Season Data Confirms AI Dividend is Being Realized
Wilson’s optimistic view is supported by the latest earnings data. An analysis by Morgan Stanley of over 17,000 corporate earnings calls and conference presentations found that so far this earnings season, about 40% of AI adopters mentioned at least one quantifiable AI benefit—nearly double the 21% from a year ago. Among the broader S&P 500 components, roughly a quarter of companies discussed quantifiable AI benefits, up from 14% a year ago to 25%.
By benefit category, financial gains—including revenue growth, operating cost reduction, and capital efficiency improvements—accounted for the largest share of AI-related comments, followed by productivity enhancements. Technology companies remain the most eager to discuss quantifiable AI benefits (51%), followed by communication services (44%) and financial firms (37%), reflecting AI adoption spreading from traditional tech into a wider range of industries.
Wilson also notes that over the past year, the average net increase in reported productivity across companies is close to 10%, driven primarily by areas such as software development, customer service, finance, and operations. "We continue to view AI adoption as an important source of earnings growth and operating leverage improvement," Wilson stated.
The AI Spending Debate: Trillion-Dollar Investment vs. Profit Delivery
Despite the positive earnings outlook for AI adopters, market concerns over massive AI capital expenditures have not dissipated, and investors are becoming more discerning in identifying potential winners. The Bank for International Settlements (BIS) warned in its latest annual economic report that the world's top five hyperscalers are expected to invest over $1 trillion cumulatively in AI-related capital expenditures between 2025 and 2026. This scale has notably outpaced the growth in corporate earnings and free cash flow, with some companies beginning to rely on debt financing.
The BIS specifically cautioned that this concentrated investment, driven by market dominance competition, bears a strong resemblance in pattern to historical canal mania, railway speculation, and the internet bubble. Goldman Sachs strategists have also warned that investor expectations for AI trades may have run ahead of reality, with "tensions between fundamental positives and high valuations continuing to intensify."
Goldman Sachs expects S&P 500 earnings per share to grow about 22% year-over-year in the second quarter, with the AI infrastructure sector contributing nearly two-thirds of that growth. According to compiled data, current market expectations for S&P 500 component net profit margins are at their highest levels in over a decade, making profitability the clear focus of this earnings season. This week, companies representing roughly one-third of the total market capitalization of the S&P 500 are expected to report results, making it the busiest week of the season. Tech giants like Apple (AAPL.US), Microsoft (MSFT.US), Amazon (AMZN.US), and Meta will release earnings, with investors closely watching whether their massive AI investments will be reflected in profits.
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