Banking giant Morgan Stanley believes the massive AI spending is triggering a real-world capital cycle that is spilling beyond tech and into the industrial economy.
In a new interview with Risk Reversal Media, Mike Wilson, CIO and chief US equity strategist at Morgan Stanley, distances his view from bubble narratives, noting that the spending cycle underway is flowing money into other areas of the economy.
“I’m not one of these guys who says, you know, it’s a bubble, but it’s not going to blow up yet. I mean, that’s like kind of a cop out. What I’m saying is I do see a spending cycle. But more importantly, let’s get back to the economy. These are real dollars going into the economy.”
Wilson emphasizes how AI’s infrastructure demands shift capital into sectors that have seen little investment in recent years, arguing the cycle will revive asset-heavy parts of the market.
“It’s not just a benefit for the hyperscalers, it’s a benefit for the energy companies, power companies, for the manufacturing companies to retool their plants and equipment… These asset-light businesses are no longer asset-light, as you rightly said. But that capital is now going to maybe spread the wealth into other parts of the economy that have been dormant.”
Under the surface, Wilson says market froth is already adjusting, with speculative corners correcting and big names consolidating while long-term fundamentals improve. But looking ahead, he says he sees the stock market rallying to new all-time high levels over the coming months.
“I think a new bull market started in April, it came on the back of a significant bear market and a recession, which means that bull market has got at least a year to go in my view.”
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