Morgan Stanley has identified new investment opportunities emerging from the recent AI-driven market sell-off, publishing a list of defensive stocks across multiple sectors for investors navigating artificial intelligence disruption risks. The Wall Street bank’s strategists highlighted companies in banking, real estate, transportation, and other industries that remain well-positioned despite volatile market conditions in 2026.
After years of AI-fueled gains, US stock markets have experienced turbulence as investors reassess high valuations and consider the existential implications of artificial intelligence. Software and technology sectors have been particularly hard hit in recent weeks, according to Morgan Stanley’s analysis.
However, the firm views the current volatility as typical of major investment cycles. “In our view, what’s going on now is typical of a major investment cycle,” the bank stated in a Wednesday client note. Strategists observed that capital appears to be rotating toward both structural and cyclical market leaders.
Defensive Stock Selection Criteria
Morgan Stanley’s “Most Defensible Stocks” list focuses on companies that meet specific criteria amid AI disruption concerns. The bank identified well-positioned incumbents in their respective sectors with pricing power related to AI adoption, along with opportunities that remain attractive despite recent price volatility.
Additionally, the analysis emphasizes firms that can leverage artificial intelligence to improve operations rather than face displacement from the technology. The bank’s thesis suggests these companies possess moats that protect them from AI-driven competition while allowing them to benefit from productivity gains.
Banking and Financial Services Lead Opportunities
In the banking sector, Morgan Stanley highlighted that regulatory requirements, balance sheet demands, and relationship-driven business models limit the risk of AI disintermediation. According to the bank, artificial intelligence drives productivity improvements across operations, risk management, and client service, supporting sustained operating leverage. Bank of America and JPMorgan Chase are among the most defensible stocks identified.
Meanwhile, consumer finance companies like American Express benefit from complex functions including fraud detection, underwriting, and rewards programs that remain difficult to disintermediate. The bank expressed skepticism that agentic AI can meaningfully disrupt credit card interchange given the importance of trust and credit extension.
Software and Internet Companies Show Resilience
Despite recent software sector weakness, Morgan Stanley sees opportunities in companies like Microsoft and ServiceNow. The bank’s thesis suggests AI expands enterprise software’s addressable market by automating unstructured work rather than replacing applications entirely. Incumbents with strong distribution, proprietary data, and workflow control are positioned to capture monetization as adoption deepens, strategists wrote.
In the internet sector, Amazon and Meta Platforms made the list as companies benefiting from agentic commerce through increased personalization and conversion rates. Platforms with scale, logistics infrastructure, and data advantages are positioned to capture incremental demand, according to Morgan Stanley.
Payment Networks and Insurance Remain Protected
Payment companies including Visa and Mastercard are viewed as net beneficiaries of AI and agentic commerce. Morgan Stanley noted rising demand for value-added services such as fraud detection as AI-driven transactions proliferate. Network moats around cost, speed, reliability, trust, and regulatory compliance remain strong, though the bank acknowledged that fast-growing agentic payment schemes warrant monitoring.
In contrast, the insurance sector benefits from complexity that artificial intelligence cannot replace. Commercial insurance requires expertise, market access, and regulatory oversight that protect companies like Aon and Marsh McLennan, according to the analysis. AI adoption improves underwriting speed, claims handling, and expense ratios, lifting margins for both brokers and carriers.
Real Estate and Transportation Sectors Offer Value
Real estate investment trusts and commercial real estate services face primarily second-order AI risks through tenant demand, Morgan Stanley indicated. However, AI adoption drives material labor productivity gains in these sectors. Complex, bespoke transactions favor augmentation over replacement, supporting incumbents like CBRE Group.
Transportation stocks such as JB Hunt Transport Services benefit from AI improvements in routing, pricing, maintenance, and asset utilization across freight networks. Durable benefits accrue to asset-heavy operators, while disruption risk concentrates in asset-light intermediaries rather than the industry overall, strategists noted.
Business services companies with proprietary data also made the list, including Equifax. According to the bank, regulatory barriers and decision-grade accuracy requirements protect leading information services franchises while AI increases demand for trusted data and analytics.
Market participants will continue monitoring how these defensive stocks perform as AI technology evolves and broader market volatility persists throughout 2026. The bank has not specified a timeline for reassessing its recommendations as market conditions develop.
