A new analysis by Morgan Stanley estimates that widespread adoption of artificial intelligence could save corporate America up to $920 billion each year. These savings, which account for implementation costs, are largely linked to a reduced need for human labor.
The report suggests that AI driven productivity gains could significantly boost earnings, potentially supporting higher stock prices of companies. The estimated savings represent more than 40% of the annual personnel expenses for companies in the S&P 500. Long term, this could translate into an increase of $13 trillion to $16 trillion in market value for the index.
Stephen Byrd, Morgan Stanley’s global head of thematic research, indicated that while some companies will reduce their workforce, others will reassign employees to more valuable tasks. The shift will likely vary by industry, with many companies opting to simply not replace workers who leave.
Sectors like consumer staples distribution, retail, and real estate management are projected to see savings exceeding their total 2026 pretax profits. In contrast, technology hardware and semiconductor companies are expected to see more modest impacts.
The potential for such substantial cost savings suggests that AI could provide the earnings growth needed to validate today’s lofty stock valuations.
Source: Axios