AI Panic Is Opportunity for Stock Pickers, Morgan Stanley Says

Rose Henderson

Wed, February 25, 2026 at 9:04 PM GMT+9 2 min read

(Bloomberg) — Excessive selloffs across sectors triggered by fears of artificial intelligence disruption create opportunities for stock pickers, according to Morgan Stanley strategists.

Investors should seek out what the team referred to as AI incumbents, strong growers and high-quality names to take advantage of lower prices and momentum behind adoption of the technology. The investment case for AI adopters with high pricing power continues to strengthen, strategists including Andrew Pauker said.

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“Nearer-term AI adoption tailwinds help to offset longer-term disruption fears for impacted areas and for the overall market,” Pauker wrote.

While software has been among sectors hardest hit by investor panic, the strategists said the market seemed to have assumed incumbents won’t be able to take advantage of AI innovation. Instead, they see AI expanding the addressable market for enterprise software, with the Morgan Stanley analysts seeing “attractive entry points” for the likes of Microsoft Corp. (MSFT), Intuit Inc. and Atlassian Corp. (TEAM).

Banks are set to be net AI beneficiaries, as the technology boosts productivity and earnings over time, the Morgan Stanley team said. They listed Citigroup Inc. ©, Bank of America Corp. (BAC), State Street Corp. (STT) and Truist Financial Corp. as the “most defensible” picks by analysts at the bank.

Among other sectors, the strategists also see consumer finance stocks as net beneficiaries of AI, with short-term disruption outweighed by eventual efficiency gains. In insurance, AI should gradually improve brokering, but complex contracts, regulation and compliance are unlike to face near-term disruption, they said.

In payments and fintech, the strategists see Mastercard Inc. (MA) and Visa Inc. (V) as net beneficiaries of AI and agentic commerce.

“What’s going on now is typical of a major investment cycle,” Pauker and his collegues wrote. “Volatility bands tend to widen and there are intermittent periods along the way where markets question both the pace of capital spending and which areas of the market could be disrupted.”

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