Artificial intelligence could become a $16 trillion boost to the stock market, according to Morgan Stanley strategists.
They estimate productivity gains and cost savings from AI could add $13 to $16 trillion in value to the S&P 500. At the high end, that implies a 29% increase in the index’s market capitalization.
The forecast assumes rapid improvements in AI and broad adoption across industries. On an annual basis, large-cap firms could see $920 billion in net benefits, mainly from reduced headcount, lower costs, and new revenue streams.
Agentic AI — systems that act with minimal supervision — could generate about $490 billion, while embodied AI, such as humanoid robots, may add $430 billion. Together, these could lift S&P 500 adjusted pre-tax income by more than 25%.
The biggest beneficiaries are expected to be consumer distribution, retail, real estate, and transportation, where AI-driven value could eventually double expected 2026 earnings.
However, widespread adoption could disrupt labor markets. Morgan Stanley warned that 90% of jobs may be impacted, with roles like “AI supply chain analyst” and “AI ethicist” emerging. While history suggests net job creation, workers may face periods of displacement.
Other forecasts are more dire: Goldman Sachs previously estimated 300 million jobs could be automated, while Anthropic CEO Dario Amodei predicted AI could eliminate half of entry-level white-collar jobs within five years.