Sultan Khalid
5 min read
We just published a list of the 10 Stocks to Watch from Morgan Stanley’s Ultra-Selective Tailwinds Strategy, and Cintas Corporation (NASDAQ:CTAS) ranked 7th on this list.
Artificial intelligence is rapidly reshaping the current corporate landscape. However, the next phase of its economic impact may extend well beyond the companies developing AI models, semiconductors, and data centers.
In its September 2026 report, AI Beneficiaries: Investing in Second-Order Effects – Update: 100x AI Cultures, Morgan Stanley argued that investors should keep a close eye on businesses that can successfully integrate the technology into their workflows more effectively than peers and use it to significantly enhance their productivity. In the long run, these beneficiaries of the second-order effect of the AI boom could drive even greater returns than companies that simply supply the infrastructure behind it.
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The report draws on historical examples to justify its argument. During the automobile revolution, car manufacturers appeared to be the obvious initial beneficiaries. However, their long-term returns were limited by intense competition and industry consolidation. Meanwhile, companies such as the Walton family’s retail giant capitalized on the broader shifts enabled by automobiles, including suburbanization and expansion of big-box retail.
Similarly, the widespread adoption of Wi-Fi did not necessarily translate into exceptional returns for router manufacturers, while Netflix emerged as a clear winner from the subsequent growth of streaming. Morgan Stanley believes that AI could follow a similar pattern, with AI-driven automation and productive workforces representing a similar second-order investment opportunity.
To identify potential winners, the firm developed an indicator called the AI Productivity Spread, calculated by subtracting the growth in average technical employee compensation from the growth in revenue per technical employee. A positive and widening spread suggests that the organization is particularly effective at translating AI adoption into higher employee productivity and business output. Morgan Stanley analyzed around 750 publicly traded technology companies and approximately 40 million employee records, concluding that the businesses with the highest AI Productivity Spreads subsequently delivered better stock returns compared to their peers.
Beyond the technology sector, the report examines how AI-driven automation could improve corporate profitability throughout the broader economy. Morgan Stanley estimates that automating half of the positions classified as having a high probability of automation across the 1,000 largest publicly traded companies could eliminate around 1.7 million jobs and cut labor costs by $207 billion. After accounting for the distribution of these savings among shareholders, employees, customers, and suppliers, these companies could retain an estimated $87 billion in additional profits.
