Stocks to Buy As the AI Scare Rips Through Markets: Morgan Stanley

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The AI-driven sell-off has produced new long-term investing opportunities, Morgan Stanley says.
The bank published a list of “Most Defensible Stocks” for investors to own amid AI disruption risks.
Strategists see opportunities in sectors such as banking, real estate, and transportation.

The AI trade isn’t as easy to navigate as it once was.

After years of being boosted by the endless hype for artificial intelligence, the US stock rally is starting to sputter in 2026 as investors turn a more critical eye to high valuations and existential concerns stemming from AI — two issues that have lurked in the background but have only recently come to spook markets.

Those worries have clobbered software and other sectors of the market in recent weeks. But for investors looking to trade volatility, the sell-off has created a plethora of long-term investment opportunities, strategists at Morgan Stanley said.

In a client note on Wednesday, the bank whipped up a list of what it called the “Most Defensible Stocks” for investors to own at the moment.

The list consisted of opportunities the company identified despite recent volatile price action. The firms also looked at “well-positioned incumbents” in their respective sectors, or those that have pricing power related to AI adoption, strategists wrote.

“In our view, what’s going on now is typical of a major investment cycle,” the bank said of the sell-off, adding that capital appeared to be rotating to both structural and cyclical leaders in the market.

Here are all the areas Morgan Stanley sees potential buying opportunities for investors — and what stocks to buy in each.

Bank stocks

Sector thesis: “Regulatory intensity, balance sheet requirements, and relationship‑driven models limit disintermediation. AI drives productivity gains across operations, risk, and client service, supporting sustained operating leverage.”

Most Defensible Stocks:

Business services stocks

Sector thesis: “Proprietary data, regulatory barriers, and decision‑grade accuracy protect leading information services franchises. AI increases demand for trusted data and analytics while improving operating leverage and product depth.”

Most Defensible Stocks:

Consumer finance stocks

This Monday, July 18, 2016, photo shows American Express credit cards, in North Andover, Mass. American Express reports financial results, Wednesday, July 20, 2016. (AP Photo/Elise Amendola)

Sector thesis: “We see the space as a net beneficiary of AI, with long-term efficiency gains in lending and payments outweighing near-term risks tied to consumer health. Core functions such as payments, fraud detection, underwriting, marketing, and servicing are data-rich and well suited to AI, and we are skeptical that agentic AI can meaningfully disintermediate credit card interchange given the importance of trust, fraud protection, credit extension, and rewards.”

Most Defensible Stocks:

Insurance stocks

Sector thesis: “Complex commercial insurance requires expertise, market access, and regulatory oversight that AI cannot replace. Adoption improves underwriting speed, claims handling, and expense ratios, lifting margins for brokers and carriers.”

Most Defensible Stocks:

Internet stocks

Amazon logo

Matthias Balk/picture alliance via Getty Images

Sector thesis: “Agentic commerce increases personalization, conversion, and online wallet share, expanding e‑commerce and digital advertising. Platforms with scale, logistics, and data are positioned to capture incremental demand.”

Most Defensible Stocks:

Payments & fintech stocks

Visa snagged the top spot in the AI maturity index.

PATRICIA DE MELO MOREIRA/AFP via Getty Images

Sector thesis: “We see the payments ecosystem as a net beneficiary of AI and agentic commerce, with rising demand for value‑added services such as fraud detection as AI‑driven transactions proliferate. Network moats around cost, speed, reliability, trust, and legality remain strong, though fast‑growing agentic payment schemes bear watching over time.”

Most Defensible Stocks:

REITs & CRE services stocks

Commercial office buildings in San Francisco

Sector thesis: “AI risk is largely second‑order through tenant demand, while adoption drives material labor productivity gains. Complex, bespoke transactions favor augmentation over replacement, supporting incumbents.”

Most Defensible Stocks:

Software stocks

Microsoft CEO Satya Nadella speaking at an event

Sector thesis: “AI expands enterprise software’s addressable market by automating unstructured work rather than replacing applications. Incumbents with distribution, data, and workflow control are positioned to capture monetization as adoption deepens.”

Most Defensible Stocks:

Transportation stocks

Sector thesis: “AI improves routing, pricing, maintenance, and asset utilization across freight networks. Durable benefits accrue to asset‑heavy operators while the disruption risk is concentrated in asset‑light intermediaries rather than the industry overall.”

Most Defensible Stocks:

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