Artificial intelligence is no longer a distant concept—it is becoming the most consequential driver of business transformation in decades.
According to a new projection from Morgan Stanley, the rapid adoption of AI could add as much as $16 trillion to equity markets, with the S&P 500 alone potentially seeing its market capitalization increase by nearly 29%. For wealth advisors and RIAs, this represents both a massive opportunity for client portfolios and a profound challenge, given the disruptive economic and social implications tied to the technology’s spread.
The firm’s strategists believe AI has reached an inflection point where adoption across industries is accelerating at a pace comparable to the introduction of the internet. The productivity gains, efficiency improvements, and entirely new revenue models created by AI could fundamentally reshape business economics. Yet, the benefits will not come without costs. Up to 90% of jobs may be impacted in some way, forcing companies, policymakers, and individuals to navigate significant workforce dislocation.
AI’s Projected Market Impact
Morgan Stanley’s report estimates that AI could deliver approximately $920 billion annually in net benefits to large-cap corporations in the years ahead. Much of that windfall will come through automation-driven cost savings and reduced headcount, alongside new opportunities for revenue generation. The firm attributes $490 billion in annual benefit to “agentic AI”—software systems capable of autonomous decision-making—and another $430 billion to “embodied AI,” or humanoid robots and other physical applications of artificial intelligence.
Taken together, these forces could boost the market value of the S&P 500 by as much as 29%. That figure translates into roughly $16 trillion in incremental equity value creation. If realized, such growth would mark one of the most dramatic accelerations of market capitalization in modern history, fueled not by cyclical drivers, but by structural transformation in how businesses operate.
For advisors, the takeaway is clear: the AI adoption cycle is not a passing trend. It is a secular shift that will reward companies that integrate these tools effectively, while potentially punishing firms that resist or lag behind.
A Double-Edged Sword: Productivity vs. Employment
The benefits of AI at the corporate level are undeniable, but the consequences for the labor market are far less certain. Morgan Stanley notes that as many as 90% of jobs could be reshaped in some form, with new AI-powered roles—such as “AI ethicist” or “AI supply chain analyst”—emerging, but also with substantial displacement of existing functions.
The firm points to historical precedent to argue that while technology revolutions often lead to net job creation over the long run, the transition can involve painful periods of displacement. The internet created millions of new roles in digital commerce, cybersecurity, and software development, but it also decimated industries built on analog models. The ability of today’s workforce to re-skill and adapt will determine how quickly workers can be reabsorbed into productive roles.
Other forecasts are more pessimistic. Goldman Sachs estimated in 2023 that AI could automate 300 million full-time jobs worldwide, particularly in administrative and legal functions. Dario Amodei, CEO of AI company Anthropic, has gone further, suggesting that up to half of entry-level white-collar roles could be eliminated within the next five years. He warned this could push U.S. unemployment as high as 20% if adjustments are not made swiftly.
For wealth advisors, this dynamic raises important considerations about the broader macroeconomic outlook. Elevated unemployment could weigh on consumer demand, real estate markets, and even government policy responses, complicating the otherwise bullish equity narrative. Advisors may need to prepare clients for an uneven transition—one in which certain sectors thrive while others struggle under labor market disruption.
Where AI Could Drive the Biggest Gains
While AI is expected to touch nearly every sector of the economy, Morgan Stanley highlights several industries that could see especially dramatic financial windfalls. Retail, transportation, real estate, and consumer goods distribution are poised to benefit most directly from cost savings and operational efficiencies. The firm projects that pre-tax income in these sectors could more than double by 2026 if adoption continues at the current pace.
Retailers, for example, are using AI to forecast demand with unprecedented accuracy, optimizing supply chains and reducing waste. Transportation companies are exploring autonomous fleets that could lower costs dramatically while increasing safety and efficiency. In real estate, AI tools are being applied to predictive maintenance, tenant management, and even property valuation, all of which could streamline operations and lift profitability.
The implication for advisors is that sector allocation strategies may need to be revisited. Industries with high exposure to AI-enabled productivity gains could offer above-market return potential, while those slower to adopt may underperform. At the same time, advisors must be mindful of valuation risks, as enthusiasm for AI themes has already driven significant inflows and multiple expansion in some areas.
Time Horizons and Adoption Rates
Morgan Stanley’s strategists are careful to note that the $16 trillion estimate assumes full adoption of AI across industries—a process that will play out over many years. Adoption timelines will vary widely by sector and company, depending on capital investment capacity, regulatory constraints, and organizational willingness to transform.
The report emphasizes that if AI capabilities continue to advance at a “non-linear rate,” the ultimate market value created could exceed current estimates. In other words, the faster AI improves, the more exponential the financial impact could be. For advisors, this suggests a need for flexible portfolio positioning—ready to take advantage of rapid accelerations in adoption, but also cautious of over-extrapolating short-term potential.
Navigating the Opportunity and Risk
For wealth advisors and RIAs, the rise of AI presents a two-pronged challenge. On the one hand, it is a once-in-a-generation growth driver that
