Here’s how to position your portfolio for the next AI wave, according to Morgan Stanley

Morgan Stanley analysts suggest the AI trade may be entering a new phase. While they see further room for AI hardware stocks to rise, they argue it is time to look beyond the chipmakers and server builders that have led the rally and diversify into a broader range of industries now beginning to realize AI's benefits.

The logic is straightforward: as AI adoption spreads, the productivity gains and cost savings may show up in sectors that are not traditionally considered technology plays. That could include businesses using AI to improve operations, customer service or product development across healthcare, industrials, financials and consumer areas.

For investors, the takeaway is less about abandoning AI leaders and more about watching how the theme broadens. Key signals to monitor include corporate commentary on AI-driven efficiency, capital spending trends beyond data centers, and whether earnings from non-tech companies start reflecting measurable AI gains. If that shift materializes, the market's AI exposure could look quite different from the hardware-heavy version seen so far.