BofA provides case studies of AI adoption across industries & ways to play

A recent Morgan Stanley note highlights the accelerating adoption of artificial intelligence across diverse industries, with 60% of CIOs expecting generative AI workloads in production by end-2025, primarily for productivity, labor savings, and customer engagement. The firm identifies key beneficiaries like Amazon, Adobe, and Johnson Controls International, which appear across multiple AI investment screens due to their strong relevance and market positioning. The report details widespread AI integration from tech giants such as Microsoft and Amazon to healthcare and financial services firms, underscoring AI's pervasive impact on operational efficiency and service delivery.

Analysis

According to a Morgan Stanley research note, the adoption of artificial intelligence is accelerating, with 60% of CIOs expecting to have generative AI workloads in production by the end of 2025 to drive productivity and operational savings. The firm's analysis screened its coverage universe to identify key beneficiaries, highlighting Amazon (AMZN), Adobe (ADBE), and Johnson Controls (JCI) as appearing across three of five distinct AI investment filters, indicating a strong combination of materiality, pricing power, and valuation potential. The implementation of AI is widespread and yielding tangible results across sectors; for example, Microsoft (MSFT) reports that 35% of its new code is AI-generated, leading to a 12% faster resolution of customer service cases. Similarly, Amazon has deployed over one million robots and has more than 1,000 AI applications in development or use. This trend extends beyond pure technology, with firms like UnitedHealth (UNH) leveraging over 1,000 AI use cases and BlackRock (BLK) co-leading a $30 billion AI infrastructure fund, demonstrating AI's pervasive and fundamental impact on business operations from finance to healthcare.

Key Decisions for Investors

• Investors should look beyond the primary AI enablers to firms like Amazon, Adobe, and Johnson Controls, which a Morgan Stanley screen identified as having a superior mix of AI materiality, pricing power, and valuation potential.
• It is prudent to prioritize companies that demonstrate tangible returns on AI investments, such as Microsoft's documented efficiency gains, as these metrics serve as key proofs of successful strategy execution.
• Consider diversifying AI-themed investments across sectors by evaluating leaders in healthcare (UnitedHealth), finance (BlackRock), and retail (Walmart) that are effectively integrating AI to enhance core operations and customer engagement.