Morgan Stanley’s Top 5 AI Stock Picks

Morgan Stanley’s top five stock picks to ride the $5.9 trillion artificial intelligence wave include companies serving up AI assistants and more intuitive search engines, CNBC reports.

The AI boom is just beginning and will lead to countless new investing opportunities, Morgan Stanley believes.

“We see surging and emerging consumer AI adoption driving further increases in digital behavior and more durable multi-year digital revenue and free cash flow growth across the industry,” Morgan Stanley analysts wrote in a client note Thursday.

“Indeed, our AI-bull case shows how more rapid digitization could shift and incremental $200 billion-plus of U.S. spend online in the next three years,” the note continued.

OpenAI launched the AI craze in October with its launch of ChatGPT. Microsoft has invested billions in the technology, which it now uses in its Bing search engine and Edge browser. Alphabet in February went toe-to-toe with Microsoft with Bard, AI technology to beef up Google.

Bank of America issued a client note of its own Tuesday proclaiming that AI is on the brink of a revolutionary “iPhone moment” whereby it will boost the world economy by $15.7 trillion by 2030.

BofA gives four main reasons why AI will transform industries:

•     Democratization of data
•     Unprecedented mass adoption
•     Warp-speed technological development
•     Abundant commercial uses

Here are five companies Morgan Stanley believes are among the best positioned to benefit from AI technology and offer tremendous upside potential for investors:

Amazon (AMZN). Morgan Stanley says this stock has a 64.6% upside-to-price target, and an additional 8.8% upside to be driven by artificial intelligence. Combined, Morgan says, the upside on this stock is 73.4%.

Alphabet (GOOG). Morgan Stanley says this stock has a 50.1% upside-to-price target, with 12.1% upside AI-driven and a combined upside of 62.2%.

Shutterstock (SSTK). Morgan Stanley says this stock has a 13.2% upside-to-price target, with 38% upside AI-driven and a combined upside of 51.2%.

The Trade Desk (TDD) is pegged at offering a 5.5% upside-to-price target and another 21.4% AI-driven upside. Combined, Morgan Stanley says, TDD offers a potential 26.9% upside.

Meta Platforms (META) is viewed as having a 10.5% upside-to-price target, with 11.3% upside AI-driven and a combined upside of 21.8%.