3 parts of the market where AI hype is turning into real returns, according to Morgan Stanley
AI investments are starting to deliver as adoption gains momentum, Morgan Stanley says.
Financials, real estate, and consumer sectors show significant increases in AI adoption.
AI adopters are leading the stock market rally with more positive earnings revisions as well.
Investors have been eager to know if the billions of dollars of AI investment are actually delivering a return for companies. Morgan Stanley thinks the answer is yes.
The bank's latest version of its AI Adopter survey shows that AI exposure and adoption are clearly gaining steam.
Over the last few months, the financials sector has seen AI-related gains. Among insurance companies, the amount of adopters increased from 48% to 71% since January 2025. For financial services companies, the amount of adopters increased from 66% to 73% in that same period.
"In our proprietary survey of 400 companies adopting GenAI into their products, Financials companies showed the greatest amount of low-hanging opportunities across both cost and revenue lines," the bank wrote in its July 2025 edition of the AI Adopter survey.
Morgan Stanley
Companies in the sector have been investing heavily into AI capabilities to automate customer service and enhance risk and compliance protocols.
Additionally, the real estate and consumer sectors showed the biggest rate of change in terms of AI adoption.
Morgan Stanley found that almost 30% of consumer durables and apparel stocks increased their AI exposure, or their involvement with AI technologies. Around 10% of these consumer stocks experienced an increase in AI materiality, meaning that AI became more important to these stocks' core investment thesis.
Overall, the percentage of consumer durables and apparel companies that Morgan Stanley qualifies as AI adopters increased from 20% to 44%. A large part of the AI adoption within the consumer sector comes from supply chain optimization — for example, retailers like Target and Walmart are using the technology to manage inventory.
In the real estate sector, 32% of REITs are now more exposed to AI than they were in January. Roughly 37% of tasks across 525,000 roles in the public REIT and commercial real estate services sector could be automated, according to Ron Kamdem, Morgan Stanley's head of U.S. REITs and commercial real estate research. Leasing services, property management, and risk management are all areas in real estate that can be made more efficient by AI, with the biggest gains coming from automation in the brokers and services segment of the real estate industry.
Companies that are exposed to AI are noticeably pulling ahead of those who haven't integrated the technology when it comes to earnings revisions, the bank added.
"There are clear signs of alpha from AI materiality among companies — this can be seen in relative price performance and earnings revisions," Morgan Stanley analysts wrote.
Morgan Stanley
Going forward, the gap between companies that have successfully adopted AI and those that have not will only continue to grow.
As the stock market continues to trend upward amid higher earnings revisions, AI adopters with high pricing power are leading the rally with higher earnings revisions, while companies disrupted by AI are seeing negative revisions, Morgan Stanley said.
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