Morgan Stanley has identified artificial intelligence sovereignty as a critical factor for national security and economic strength. Governments worldwide are actively supporting domestic AI infrastructure, creating opportunities for select global companies to benefit from this trend. According to Morgan Stanley analysts, firms such as SpaceX and Amkor Technology are well-positioned to capitalize on the AI sovereignty wave.
The significance of artificial intelligence extends beyond investor returns and corporate profits; it has become a matter of national security. Morgan Stanley notes that this dynamic serves as a catalyst for a specific category of stocks within the AI sector. Governments are intervening in markets to secure their positions as winners in the AI race, aiming for autonomous control over AI technologies and reducing dependence on foreign entities.
Morgan Stanley refers to this investment theme as "AI sovereignty." In a research report dated August 19, the analyst team led by Arianna Salvatore stated: "AI is increasingly becoming strategic infrastructure, prompting governments to prioritize domestic capacity, trusted partners, and tighter technology controls. As AI evolves into a tool for national economic and geopolitical competition, the U.S. government is likely to prioritize self-sufficiency in computing power, data, energy, talent, foundation models, and supply chains."
This implies that governments will foster domestic AI infrastructure development while reducing reliance on overseas technologies. Essentially, this requires expanding all AI-related hardware and software resources. The report further noted: "Achieving AI autonomy requires building more domestic and regional data centers, enhancing system redundancy, expanding power generation and transmission capacity, establishing localized cloud and network infrastructure, and in some cases, constructing a parallel technology stack."
Morgan Stanley believes the current industry landscape will continue to favor certain players within the sector, describing AI sovereignty as "one of the fastest-growing investment themes in the market." In the report, the bank listed a set of stocks most likely to benefit from the AI sovereignty and technology localization trends.
The following is the list of U.S.-listed stocks, with each offering at least 20% potential upside based on Morgan Stanley's base-case target prices. The bank's ratings and the importance of each stock within the AI sovereignty framework are also included. Core logic stocks represent the highest correlation, followed by key stocks.
SpaceX (SPCX) - Logic Weight: Core Logic Stock | Listing Market: United States | Sector: Telecommunications | Market Cap: $1.7 trillion | Morgan Stanley Rating: Overweight | Target Price: $300 | Base-Case Potential Upside: +105%
Amkor Technology (AMKR) - Logic Weight: Core Logic Stock | Listing Market: United States | Sector: Semiconductors | Market Cap: $13.9 billion | Morgan Stanley Rating: Equal-weight | Target Price: $70 | Base-Case Potential Upside: +26%
ACM Research (ACMR) - Logic Weight: Core Logic Stock | Listing Market: China-related (U.S.-listed) | Sector: Semiconductors | Market Cap: $4.8 billion | Morgan Stanley Rating: Overweight | Target Price: $130 | Base-Case Potential Upside: +60%
Alibaba Group Holding (BABA) - Logic Weight: Key Stock | Listing Market: China-related (U.S.-listed) | Sector: Consumer Discretionary Retail | Market Cap: $309.9 billion | Morgan Stanley Rating: Overweight | Target Price: $180 | Base-Case Potential Upside: +44%
KLA (KLAC) - Logic Weight: Key Stock | Listing Market: United States | Sector: Semiconductors | Market Cap: $273.8 billion | Morgan Stanley Rating: Overweight | Target Price: $253 | Base-Case Potential Upside: +21%
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