Morgan Stanley strategists indicate that U.S. companies integrating artificial intelligence (AI) capabilities are poised to achieve stronger profit margins.

The team led by Michael Wilson states that for businesses with AI as a core investment theme and pricing power at neutral to strong levels, market expectations for their profit margins have shown "the most significant improvement." He forecasts that by 2027, approximately 100 basis points of net profit margin expansion will be attributable to AI adoption.

Wilson wrote in a report: "The outlook for AI adopters is becoming increasingly attractive. This is particularly important because industries often considered vulnerable to disruption—including transportation, software and services, and professional services—also belong to the more appealing group of AI adopters."

The team's analysis shows that companies such as Halliburton, Bank of America, CVS Health, and NextEra Energy Inc. are expected to be major beneficiaries of AI applications. Firms like Alphabet, Meta Platforms, and Nvidia, which benefited from the initial wave of AI market momentum, continue to stand out in Wilson's screening process.

This week, companies representing about one-third of the total market capitalization of the S&P 500 are expected to report earnings, marking the busiest period of the earnings season. A basket of AI adopter stocks compiled by Bank of America has outperformed so-called hyperscale cloud providers year-to-date. Meanwhile, semiconductor-related stocks, which had previously seen strong gains, have recently weakened due to concerns over elevated valuations.

Wilson suggests this trend may continue as "AI applications clearly transition from experimentation to measurable enterprise value." He notes that so far this earnings season, approximately 40% of AI adopters have mentioned at least one quantifiable benefit, up from 21% a year ago. The strategist also states that over the past year, the average net increase in productivity reported by companies has approached 10%, primarily driven by areas such as software development, customer service, finance, and operations.

Wilson writes: "We continue to view AI adoption as an important source of driving earnings growth and improving operating leverage."