Morgan Stanley strategists wrote that the US stock market pullback is nearing its end, and investors should prepare to add exposure to risk assets, with a focus on high-quality companies showing improving earnings expectations.
The team, led by Michael Wilson, said the market selloff is approaching its finish, and investors should look for opportunities to buy stocks. They believe the S&P 500 still has room to fall and could decline quickly or gradually in November, but they view this drop as a buying opportunity rather than the start of a new deep bear market.
The strategists highlighted companies that combine quality characteristics, upward earnings revisions, and Morgan Stanley overweight ratings. The names include Google parent Alphabet, Apple, Broadcom, Micron, Visa, Mastercard, Costco, Trane Technologies, and Vertiv.
They expect AI investment by leading cloud providers and emerging cloud service companies to keep growing, reaching $1.6 trillion in 2027 and rising to $1.8 trillion in 2028; next year, AI capital spending will directly contribute a quarter of the incremental revenue of S&P 500 constituents.
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