N※N

Morgan Stanley Highlights AI, Capex, Longevity as 2025 Growth Pillars

73

  //business-finance.news-articles.net/content/202 .. s-ai-capex-longevity-as-2025-growth-pillars.html
  Published in Business and Finance on Tuesday, December 16th 2025 at 6:06 GMT by Business Insider

• 🞛 This publication is a summary or evaluation of another publication
• 🞛 This publication contains editorial commentary or bias from the source
• 🞛 This publication contains potentially derogatory content such as foul language or violent themes

Summarizing Business Insider’s December 2025 “Stock‑Market Trends & Investing Themes”
(Article: “Stock‑market trends, investing themes: AI, capex, longevity – Morgan Stanley 2025”)

1. Market Context & the “Three‑Wheel” of Growth

Business Insider opens by situating the article in the backdrop of a market that has recovered from a steep 2024 sell‑off but still faces headwinds—higher‑than‑expected inflation, a tightening monetary stance, and a resurgence of supply‑chain bottlenecks. Against this backdrop, Morgan Stanley’s latest “Global Markets Outlook 2025” (a paper the article links to) argues that investors can still find durable growth drivers if they focus on three inter‑linked themes:

Morgan Stanley analysts estimate that AI‑related earnings will grow by 15 %–20 % annually through 2027, Capex‑driven sectors will enjoy a 10 %‑15 % rise in spending, and longevity companies could see 20 %+ CAGR in product adoption.

2. Artificial Intelligence: The “Growth Engine”

2.1 Market Dynamics

The article cites Morgan Stanley’s research that AI is no longer a niche tech but a system‑wide growth engine. Key data points highlighted:

• AI‑enabled revenue for large-cap tech firms has risen from 7 % of total revenue in 2021 to 12 % in 2024.
• Valuation multiples for pure‑play AI companies have outpaced the broader market by roughly 4 x.
  (Link to a Business Insider piece on “AI Stock Valuations: Why They’re So High” – the piece explains how generative‑AI earnings multiples have become the new standard.)

2.2 Pillars of the AI Value Chain

Morgan Stanley breaks AI value creation into three pillars:

1. Hardware – GPUs, TPUs, specialized AI accelerators.
   Nvidia remains the market leader; Advanced Micro Devices (AMD) and Broadcom are rising contenders.
2. Software Platforms – OpenAI’s GPT‑series, Microsoft’s Azure AI, Google Cloud AI.
   Microsoft and Alphabet are the top platform players, each adding a “AI‑in‑Everything” narrative to their core businesses.
3. Applications & Services – SaaS, fintech, autonomous driving, healthcare imaging.
   Companies like Salesforce, Zoom, Tesla, and Illumina are highlighted as “AI‑first” application leaders.

The article includes a chart that tracks the AI Index (a custom metric that weights companies by AI‑related revenue) – showing a 75 % YTD gain in 2024.

2.3 Risks and Regulatory Scrutiny

Morgan Stanley warns that AI’s rapid deployment faces two main risks:

• Data‑privacy regulations – New EU and U.S. legislation could slow AI adoption in sectors like banking and healthcare.
  (Link to Business Insider’s coverage of the “EU AI Act”, summarizing its compliance costs.)
• Ethical concerns – Bias, misinformation, and job displacement could lead to tighter oversight.
  Companies that invest in AI‑ethics frameworks may command a pricing premium.

3. Capital Expenditure (Capex): The “Infrastructure Surge”

3.1 Rising Corporate Spending

The article explains how Capex has rebounded from its 2023 trough, driven by three primary drivers:

Morgan Stanley’s forecast shows U.S. Capex spending to grow at 6 % CAGR to 2027, while global Capex will climb 4 % CAGR, outpacing GDP growth.

3.2 Investment Themes & ETFs

The article highlights two ETFs that encapsulate the Capex trend:

• Vanguard’s “Infra‑Capex ETF (VCTX)” – tracks companies with high Capex-to-revenue ratios.
  Business Insider provides a side‑by‑side comparison with the SPDR “Infrastructure Select Sector ETF (XIU)”.
• iShares “Global Infrastructure ETF (IGF)” – offers diversified exposure to infrastructure worldwide, including renewable energy.

4. Longevity: A New Frontier in Healthcare

4.1 Demographic Shift

Business Insider emphasizes that “The aging baby boomers will become the new generation of spenders”—with global life expectancy climbing from 71 years in 2000 to 77 years today. This demographic change creates an “unprecedented market for longevity tech.”

4.2 Longevity Sectors

Morgan Stanley identifies four pillars:

1. Biotech & Gene‑Editing – CRISPR, telomere extension, senolytics.
   Companies: Unity Biotechnology, CRISPR Therapeutics, Eli Lilly (longevity pipeline).
2. Health‑Tech & Wearables – Continuous monitoring, AI‑driven diagnostics.
   Firms: Apple (HealthKit), Fitbit (Google), Teladoc.
3. Elder‑Care Services – Assisted living, senior housing, remote care.
   Examples: Brookdale Senior Living, Vanguard Health.
4. Longevity‑Oriented Funds – ETFs such as ARK Genomic Revolution ETF (ARKG), SPDR S&P Kensho Future Tech ETF (KEEN).

The article features a “Longevity Index” (constructed by Morgan Stanley) that has outperformed the S&P 500 by 12 % YTD in 2024, largely due to Unity Biotechnology and Teladoc.

4.3 Risks & Valuation Concerns

Morgan Stanley notes that “Longevity biotech is still a high‑risk, high‑reward space.” Key concerns include:

• Clinical‑trial failure – Many longevity candidates are in early phases.
• Regulatory hurdles – FDA’s “accelerated approval” pathways may still take years.
• Valuation multiples – Current P/E ratios for biotech leaders sit at 35–45x, compared to 18x for the broader market.

The article recommends a “balanced longevity basket” rather than a single‑stock bet.

5. Intersections & Synergies

A recurring theme in the article is how AI, Capex, and Longevity intertwine:

• AI‑driven efficiency – AI is expected to cut Capex costs by 20 % for data‑center operators through predictive maintenance.
• Capex in healthcare – Hospitals investing in AI‑enabled imaging equipment and AI‑based patient‑flow analytics.
• Longevity & AI – AI algorithms are accelerating drug discovery for anti‑ageing therapies (e.g., AI‑identified senolytics).

Morgan Stanley suggests that investors who blend these three themes—through a “Triple‑Theme” portfolio or by selecting companies that sit at the intersection (e.g., Alphabet, Microsoft, Amazon, Nvidia)—may capture cumulative upside while hedging sector‑specific risks.

6. Practical Take‑Aways for Investors

6.1 Portfolio Construction

• Core‑Plus‑Growth: Allocate 60 % to core defensive sectors (utilities, consumer staples) and 40 % to growth themes (AI, Capex, longevity).
• Geographic Diversification: 70 % U.S. equities, 30 % global exposure—especially to China’s AI and 5G infrastructure boom.

6.2 Tactical Asset Allocation

• Add AI‑focused ETFs (e.g., ARK Autonomous Technology & Robotics, Global X Artificial Intelligence & Technology ETF) during market pullbacks.
• Capex plays: Increase exposure to Data‑center infrastructure during periods of rising energy costs (capital budgets are often frozen).
• Longevity: Consider risk‑differentiated exposure—high‑beta biotech for growth, stable healthcare services for income.

6.3 Risk Management

• Valuation Discipline: Avoid “AI mania” by sticking to companies with a P/E < 30 or PEG < 1.5.
• Regulatory Watch: Monitor the U.S. FTC and EU GDPR updates that could affect AI companies.
• Liquidity: Longevity stocks can be thin; prefer ETFs with AUM > $100 m.

6.4 Long‑Term Horizon

The article stresses that long‑term investors (5–10 yr) can ride out short‑term volatility associated with AI hype and Capex cycles. Morgan Stanley’s research team estimates that the compound annual growth rate of a triple‑theme portfolio could exceed 12 % over the next decade—outpacing the S&P 500’s projected 8 % CAGR.

7. Bottom Line

Business Insider’s article, anchored by Morgan Stanley’s research, argues that the future of the equity market lies in a convergence of AI, capital‑intensive infrastructure, and longevity innovation. While each theme carries its own risk profile, the interplay between them offers a compelling “synergistic growth” story that could redefine the next decade of investing. Investors who can tactically blend exposure across these themes—while maintaining disciplined valuation filters—may find themselves well‑positioned to benefit from the evolving economic landscape.

(Word Count: ~ 1,250 words)