Thomson Reuters (TRI) is facing intensifying competition from artificial intelligence players, which could add some risk to its future growth, Morgan Stanley said in a note emailed Friday.

The company's artificial intelligence tools have received strong demand from law firms, and management expects a steady rise in the percentage of annual contract value driven by generative AI products, according to the note.

However, AI competitors have expanded their offerings in the past six months and entered the Legal vertical, raising investor concerns about Thomson Reuters' ability to sustain growth, the investment firm said.

Morgan Stanley said having a one-stop shop service could serve as an advantage for the company against competitors.

"Having a deep-pocketed competitor expand solutions does not necessarily mean that [Thomson Reuters] will lose share," the firm added.

Morgan Stanley maintained an equal-weight rating on the stock, but lowered its price target to $116 from $165.

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